Chapter 18, Problem 5PSA

Problem 18-5A Inventory computation and reporting C4 P1 Shown here are annual financial data taken from two different companies.

Musk World Wave-Board

Retail Manufacturing

Beginning inventory

Merchandise...................... $200,000

Finished goods..................... 1500,000

Cost of purchases..................... 300,000

Cost of goods manufactured............ 375,000

Ending inventory

Merchandise...................... 175,000

Finished goods..................... 225,000

Required

1. Compute the cost of goods sold section of the income statement for the year for each company.

Check (1) Wave-Board's cost of goods sold, $1,150,000

2. Identify the inventory accounts and describe where each is reported on the income statement and balance sheet for both companies.