Question

The following data are for Mitchell Department Store. The account balances (in thousands) are for 2017 E: (Click the icon to view the account balances.) Requirements 1. Compute (a) the cost of goods purchased and (b) the cost of goods sold. 2. Prepare the income statement for 2017. Requirement 1. Compute (a) the cost of goods purchased and (b) the cost of goods sold. (a) Calculate the cost of goods purchased by completing the schedule. (If a box is not used in the schedule, leave the box empty; do no Data Table Mitchell Department Store Schedule of Cost of Goods Purchased For the Year Ended December 31, 2017 (in thousands) Purchases Add: Transportation-in $ Marketing, distribution, and customer-service costs Merchandise inventory, January 1, 2017 Utilities 34,000 25,000 14,000 48,000 37,000 Deduct: Purchase return and allowances General and administrative costs Merchandise inventory, December 31, 2017 Purchases Miscellaneous costs Transportation-in 150,000 Purchase discounts Cost of goods purchased 4,000 9,000 2,000 Purchase returns and allowances Purchase discounts 5,000 300,000 Revenues

Answer 1

1. A)   

Mitchell Department Store

Shedule of Cost of Goods Purchased

For the year Ended December 31,2017

Pariculars	Amount
Purchases	$ 150,000
Add: Transportation -in	$ 9,000
	$ 159,000
Deduct
Purchase Return and Allowance	$ 2,000
Purchase Discount	$ 5,000
Cost of Goods Purchased	$ 152,000

B . )

Mitchell Department Store

Schedule of Cost of Goods Sold

For the Year Ended December 31, 2017

Particular	Amount
Beginning Merchandise Inventory	$ 25,000
Add: Cost of Goods Purchased (Above)	$ 152,000
Cost of Goods avilable for Sale	$ 177,000
Less: Ending Merchandise Inventory	$ 37,000
Cost of Goods Sold	$ 140,000

2.

Mitchell Department Store

Income Statement

Year Ended December 31, 2017

Particulars	Amount	Amount
Revenue		$ 300,000
Less: Cost of Goods Sold (Above)		$ 140,000
Gross Margin		$ 160,000
(Less )Operating Cost;
Marketing, Distribution and Customer Service Cost	$ 34,000
Utilities	$ 14,000
General & Administrative Cost	$ 48,000
Miscellaneous Costs	$ 4,000
Total Operating Cost		$ 100,000
Operating Income		$ 60,000