Chapter 3, Problem 20E

Determining cost of goods sold: Periodic system (Appendix)

Tippah Antiques uses the periodic inventory system to account for its inventory transactions. The following account titles and balances were drawn from Tippah’s records for the year 2018: beginning balance in inventory, $42,000; purchases, $128,000; purchase returns and allowances, $12,000; sales, $520,000; sales returns and allowances, $3,900; freight-in, $1,000; and operating expenses, $130,000. A physical count indicated that $26,000 of merchandise was on hand at the end of the accounting period.

Required

a. Prepare a schedule of cost of goods sold.

b. Prepare a multistep income statement.