Concept explainers
Inferring Missing Amounts Based on Income Statement Relationships
Supply the missing dollar amounts for each of the following independent cases:
Explanation of Solution
Inventory:
It refers to the current assets that a company expects to sell during the normal course of business operations, the goods that are under process to be completed for future sale, or currently used for producing goods to be sold in the market.
Beginning inventory
The balance of stock of goods in hand during the beginning of the accounting period is stated as beginning inventory.
Ending inventory:
The balance of stock of goods in hand during the end of the accounting period is stated as ending inventory.
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.
Following is the table for missing information:
Case | ||||
Particulars | (Amount in Dollars) | |||
A | B | C | D | |
Sales revenue | $800 | $900 | $600(9) | $800 |
Less: Cost of Goods sold: | ||||
Beginning inventory | $100 | $200 | $100 | $150(13) |
Add: Purchases | $700 | $700 | $300(10) | $600 |
Total available for sale | $800(1) | $900(5) | $400(11) | $750(14) |
Less: Ending inventory | $500 | $150(6) | $200 | $300 |
Total cost of goods sold | $300(2) | $750(7) | $200 | $450(15) |
Gross profit | $500(3) | $150(8) | $400 | $350(16) |
Less: Operating expenses | $200 | $150 | $150 | $250 |
Income from operations | $300(4) | $0 | $250(12) | $100 |
Table (1)
Working notes:
Calculate the total value available for sale of case A.
Calculate the value of total cost of goods sold of case A.
Calculate the value of gross profit of case A.
Calculate the value of income from operations of case A.
Calculate the total value available for sale of case B.
Calculate the value of ending inventory of case B.
Calculate the value of total cost of goods sold of case B.
Calculate the value of gross profit of case B.
Calculate the sales revenue of case C.
Calculate the value of purchases of case C.
Calculate the total value available for sale of case C.
Calculate the value of income from operations of case C.
Calculate the value of beginning inventory of case D.
Calculate the total value available for sale of case D.
Calculate the value of total cost of goods sold of case D.
Calculate the value of gross profit of case D.
Want to see more full solutions like this?
Chapter 6 Solutions
Fundamentals Of Financial Accounting
- What is the effect on the current period income statement and the balance sheet when inventories are written down using the lower of cost or market method? What is the effect on future period income statements and balance sheets?arrow_forwardWhat is the difference between a multi-step and simple income statement?arrow_forwardWhen should an average amount be used for the numerator or denominator? When the denominator is a balance sheet item or items. When a ratio consists of an income statement item and a balance sheet item. When the numerator is a balance sheet item or items. When the numerator is an income statement item or items.arrow_forward
- The normal ordering of items in the income statement would be best illustrated by which of the following? Group of answer choices A. Income from continuing operations, extraordinary items, cumulative effects, discontinued operations, net income B. Income from continuing operations, discontinued operations, extraordinary items, cumulative effects, net income C. Extraordinary items, cumulative effects, income from continuing operations, discontinued operations, net income D.Discontinued operations, income from continuing operations, extraordinary items, cumulative effects, net incomearrow_forwardDefine extraordinary items. How are extraordinaryitems distinguished from items that are presented asseparate line items in an income statement, but are notextraordinary?arrow_forwardIndicate the effects of the transactions listed in the following table on total current assets,current ratio, and net income. Use (1) to indicate an increase, (2) to indicate a decrease,and (0) to indicate either no effect or an indeterminate effect. Be prepared to state anynecessary assumptions and assume an initial current ratio of more than 1.0. (Note: A goodaccounting background is necessary to answer some of these questions; if yours is notstrong, answer the questions you can.)arrow_forward
- One item is omitted in each of the following four lists of income statement data. Determine the amounts of the missing items, identifying them by letter.arrow_forwardWhich of the following accounts would not be reported under revenue on a simple income statement? A. interest revenue B. net sales C. rent revenue D. operating expensesarrow_forwardwhen putting together an income statement do the revenues and expenses have to put in order from highter amount to lowest?arrow_forward
- choose: When a balance sheet amount is related to an income statement amount in comparing a ratio a. The ratio losses its historical perspective because at the beginning of the year amount is combined with an end of the year amount. b. The income statement amount should be converted to an average for the year. c. Comparisons should be converted to market value d. The balance sheet amount should be converted to an average for the year.arrow_forwardWhich of the following questions cannot be answered when analyzing the information presented in an income statement? a. What were the sales for the period? b. What was the profit for the period? c. How much was spent to pay salaries during the period? d. What was the cash balance at the end of the period?arrow_forwardWhat items are not presented on the income statement?arrow_forward
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCollege Accounting, Chapters 1-27 (New in Account...AccountingISBN:9781305666160Author:James A. Heintz, Robert W. ParryPublisher:Cengage Learning
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning