Chapter 6, Problem 6.35EX

a.

To determine

Cost of Goods Sold

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:

$\boxed{\text{Cost of Goods Sold}=\text{Beginning Inventory}+\text{Purchases}–\text{Ending Inventory}}$

To Calculate: The cost of goods sold of Company H.

b.

To determine

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:

$\text{Gross profit}=\text{Sales}–\text{Cost of merchandise sold}$

To Calculate: The gross profit to be reported on the income statement for the year ended April 30, 2016.

c.

To determine

To Explain: Whether the gross profit is different if the perpetual inventory system was used instead of the periodic inventory system.