Question

Kleiner Merchandising Company Accumulated depreciation $ 700 Beginning inventory 11,500 Ending Inventory 6,900 Expenses 2,100 Net Purchases 14,300 Net Sales 22,500 Krug Service Company Expenses $ 8,700 Revenues 27,000 Cash 700 Prepaid rent 680 Accounts payable Equipment 2,500 200 Required: a. Compute the goods available for sale, the cost of goods sold, and the gross profit for the merchandiser. Hint: Not all information may be necessary. 3. Use the above information from a service company and from a merchandiser to compute net income.

Answer 1

a)	Goods available for sale
	Beginning inventory				11,500
	Add:Net purchases				14,300
	Goods available for sale				25,800	answer
	Cost of goods sold
	Goods available for sale				25,800
	less:Ending inventory				-6,900
	Cost of goods sold				18,900	answer
	Gross profit
	net sales				22,500
	less:cost of goods sold				-18,900
	Gross profit				3,600	answer
b)	Net income for Krug Service company
	Revenues				27,000
	less:Expenses				-8,700
	Net income for Krug Service company				18,300	answer
	Net income for Kliener Merchandising Co
	Gross profit				3,600
	less:Expenses				-2,100
	Net income for Kliener Merchandising Co				1,500	answer