Explanation 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: Cost of Goods Sold = Beginning Inventory + Purchases – Ending Inventory (a) The missing amount of net purchases in the cost of goods sold section for Company B. Calculate the amount of net purchases. Purchases = $1,500 Purchases returns and allowances = $80 Net purchases = Purchases – Purchases returns and allowances = $1,500 – $80 = $1,420 (a) (b) The missing amount of cost of goods purchased in the cost of goods sold section for Company B. Calculate the amount of cost of goods purchased. Net purchases = $1,420 (a) Freight-in charges = $130 Cost of goods purchased = Net purchases + Freight-in charges = $1,420 +$130 =$1,550 (c) The missing amount of cost of goods sold in the cost of goods sold section for Company B. Calculate the amount of cost of goods sold. Cost of goods available for sale = $1,800 Ending inventory = $310 Cost of goods sold = Cost of goods available for sale – Ending inventory = $1,800 –$310 = $1,490 (d) The missing amount of purchase returns and allowances in the cost of goods sold section for Company M. Calculate the amount of purchases returns and allowances. Purchases = $1,080 Net purchases = $1,040 Purchases returns and allowances = Purchases – Net purchases = $1,080 – $1,040 = $40 (e) The missing amount of freight-in charges in the cost of goods sold section for Company M. Calculate the amount of freight-in charges. Cost of goods purchased = $1,230 Net purchases = $1,040 Freight-in charges = Cost of goods purchased – Net purchases = $ 1 , 230 − $ 1 , 040 = $ 190 (f) The missing amount of ending inventory in the cost of goods sold section for Company M. Calculate the amount of ending inventory. Cost of goods available for sale = $1,350 Cost of goods sold = $1,230 Ending inventory = Cost of goods available for sale – Cost of goods sold = $1,350 – $1,230 = $120 (g) The missing amount of purchases in the cost of goods sold section for Company O

7th Edition

ISBN: 9781119494799

Author: Kimmel

Publisher: WILEY

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Chapter 5, Problem 13E

To determine

Compute the missing amounts.

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Chapter 5, Problem 12E

Chapter 5, Problem 14E

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Zorro Company has a delivery truck that is being sold after 5 years of use. The current book value of the delivery truck is $4,600. If Zorro Company sells the delivery truck for $9,500, what is the impact of this transaction?

Chapter 5 Solutions

EBK ACCOUNTING:TOOLS F/BUSINESS...

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