
Concept explainers
Calculate the missing amounts of the income statement a through e.

Answer to Problem 1E
The following table shows the missing amounts of the merchandiser’s profit data.
Particulars | a ($) | b ($) | c ($) | d ($) | e ($) |
Sales | 62,000 | 43,500 | 46,000 |
79,000 (9) | 25,600 |
Cost of goods sold | |||||
Merchandise inventory (beginning) | 8,000 | 17,050 | 7,500 | 8,000 | 4,560 |
Total cost of merchandise purchases | 38,000 |
1,950 (4) |
43,750 (7) | 32,000 | 6,600 |
Merchandise inventory (ending) |
(11,950) (1) | (3,000) | (9,000) | (6,600) |
(4,160) (10) |
Cost of goods sold | 34,050 | 16,000 |
42,250 (6) |
33,400 (8) | 7,000 |
Gross profit |
27,950 (2) |
27,500 (5) | 3,750 | 45,600 |
18,600 (11) |
Less: Expenses | (10,000) | (10,650) | (12,150) | (3,600) | (6,000) |
Net income (loss) |
17,950 (3) | 16,850 | 8,400 | 42,000 |
12,600 (12) |
Table (1)
Explanation of Solution
Cost of goods sold indicates the costs involved for the inventory sold by the business in a specific period of time. Its mathematical representation is as below:
Gross profit represents the revenue after the deduction of cost of goods sold from the net sales of a business. Its mathematical representation is as below:
Calculate the ending merchandise inventory of a’s income statement.
Cost of goods sold = $34,050
Total cost of merchandise purchase = $38,000
Beginning merchandise inventory = $8,000
Calculate the gross profit of a’s income statement.
Sales = $62,000
Cost of goods sold = $34,050
Calculate net income of a’s income statement.
Gross profit = $27,950 (2)
Expenses = $10,000
Calculate the total cost of merchandise purchase of b’s income statement.
Cost of goods sold = $16,000
Beginning merchandise inventory = $17,050
Ending merchandise inventory = $3,000
Calculate the gross profit of b’s income statement.
Sales = $43,500
Cost of goods sold = $16,000
Calculate the cost of goods sold of c’s income statement.
Sales = $46,000
Gross profit = $3,750
Calculate the total cost of merchandise purchase of c’s income statement.
Cost of goods sold = $42,250 (6)
Beginning merchandise inventory = $7,500
Ending merchandise inventory = $9,000
Calculate the cost of goods sold of d’s income statement.
Total cost of merchandise purchase = $32,000
Beginning merchandise inventory = $8,000
Ending merchandise inventory = $6,600
Calculate the sales of d’s income statement.
Gross profit = $45,600
Cost of goods sold = $33,400 (8)
Calculate the ending merchandise inventory of e’s income statement.
Cost of goods sold = $7,000
Total cost of merchandise purchase = $6,600
Beginning merchandise inventory = $4,560
Calculate the gross profit of e’s income statement.
Sales = $25,600
Cost of goods sold = $7,000
Calculate net income of e’s income statement.
Gross profit = $18,600 (2)
Expenses = $6,000
Want to see more full solutions like this?
Chapter 4 Solutions
Financial Accounting Fundamentals
- Kate Corporation owns a patent on an automated system. The company has been amortizing the patent on a straight-line basis since 2013, when it was acquired at a cost of $60 million at the beginning of that year. Due to technological advancements, management has now decided that the patent will benefit the company for a total of five years instead of the original ten-year amortization period. This decision was made at the end of 2016 (before adjusting and closing entries). What is the appropriate 2016 amortization expense for the patent?arrow_forwardCalculate the Operating Cash Flow (OCF) from the following data: • Change in net fixed assets: $25,000 • Change in net working capital: $30,000 • Dividends Paid: $35,000 Depreciation Expense: $40,000 • Interest Paid: $22,000 • Net New Borrowing: $18,000 • Net New Equity Issued: $12,000arrow_forwardA machine costing $92,500 with a 9-year life and $88,200 depreciable cost was purchased on January 1. Compute the yearly depreciation expense using straight-line depreciation. Round the answer to the nearest whole dollar.arrow_forward
- What are the beginning and ending amounts of equity on these financial accounting question?arrow_forwardGeneral accounting questionarrow_forwardSeveral years ago, a parent company acquired all of the outstanding common stock of its subsidiary for a purchase price of $320,000. On the acquisition date, this purchase price was $75,000 more than the subsidiary's book value of Stockholders' Equity. The AAP was entirely attributable to Goodwill. On the date of acquisition, the parent company's management believed that the goodwill had a 10-year useful life. Since the date of acquisition, the subsidiary has reported a cumulative net income of $260,000 and paid $105,000 in dividends to its parent company. Compute the balance of the Equity Investment account on the parent's balance sheet, assuming that the Goodwill asset has not declined in value since the date of acquisition.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





