Question

1 x fe Exercise 2 н Exercise 2 In each case, use the following information to calculate the missing information: ? 19,200 32,000 384,000 Grosales Sales discounts Sales returns and allowances Net sales Merchandise inventory, January 1 Purchases Purchase discounts Purchase returns and allowances Net purchases Transportation in Net cost of purchases Cost of goods available for sale? Merchandise inventory, December 31 Cost of goods sold Gross margin Care2 640,000 $ ? $ 25,600 19,200 44.800 608,000 1,209,600 $ 256,000 $ 384,000 768,000 $ 7,680 13.440 24,320 31,360 352,000 $ 25,600 38,400 377,600 761,600 1,081,600 3R4,000 12,800 32,000 672,000 32,000 320,000 $ 1,088,000 448,000 640.000 320,000 512,000 Exercise In each of the following equations supply the missing terms 1 Net sales Gross sales- Sales returns and allowances) 2 Cost of goods sold Beginning inventory. Net cost of purchases 3 Gross margin --Cost of goods sold 4 Income from operations -Operating expenses S Net income income from operations.

Answer 1

Exercise 2
Income Statement					Calculation
	Case 1	Case 2	Case 3		Case 1	Case 2	Case 3
Gross Sales	640,000	1,280,000	1,011,200			=1,209,600+25,600+44,800	=960,000+19,200+32,000
Sales discounts	12,800	25,600	19,200		=640,000-19,200-608,000
Sales returns & allowances	19,200	44,800	32,000
Net Sales	608,000	1,209,600	960,000				=640,000+320,000
Merchandise Inventory, January 1	256,000	320,000	384,000
Purchases	384,000	768,000	716,800				=672,000+12,800+32,000
Purchases discounts	7,680	13,440	12,800
Purchases returns & allowances	24,320	31,360	32,000
Net Purchases	352,000	723,200	672,000			=768,000-13,440-31,360
Transportation-in	25,600	38,400	32,000
Net Cost of Purchases	377,600	761,600	704,000				=672,000+32,000
Cost of goods available for sale	633,600	1,081,600	1,088,000		=256,000+377,600	=1,081,600-761,600
Merchandise Inventory, December 31	313,600	384,000	448,000		=633,600-320,000
Cost of goods sold	320,000	697,600	640,000			=1,081,600-384,000
Gross Margin	288,000	512,000	320,000		=608,000-320,000
Note
In Case 3, first calculate Net Sales, then only you can calculate Gross Sales
Exercise 3
Net Sales = Gross Sales - (Sales discounts + Sales returns & allowances)
Cost of goods sold = Beginning Inventory + Net cost of purchases - Ending Inventory
Gross margin = Net Sales - Cost of goods sold
Income from operations = Gross margin - Operating expenses
Net income = Income from operations + Non-operating income (expenses) - Income tax expenses