Chapter 5, Problem 4BTN

To determine

Concept Introduction:

Net Sales:

It refers to that part of sales which is derived after deducting sales returns and allowances, sales discounts from gross sales.

Cost of goods sold:

It refers to all the costs that a business incurs to produce a product. It is computed by using the formula-

Gross Profit:

It is derived by deducting cost of goods sold from its revenues. It depicts the margin that a business is earning from its operating activities.

Inventory shrinkage:

Shrinkage in inventory is used to determine the loss of inventory due to theft or damage.

1. Net sales, cost of merchandise purchases, cost of goods sold, gross profit and net income of Official Brands.
2. Physical stock of merchandise computed was $76,000. How this affects previously computed amounts in step 1.