Question

D Question 2 2.5 pts Jackson Company reported the following information relating to its inventory for 2829: sales revenue... freight in ...... purchase returns cost of goods available for sale purchases.. gross profit ......... freight out ........ purchase discounts .. $427,000 10.980 16 590 419.25e 392.890 46,250 11.738 Jackson Company reported an inventory turr var ratio of 4,20 for 2020. Calculate the count of purchase discounts reported by Jackson Company during 2020.

Answer 1

Step 1)Calculation of cost of goods sold = Sales revenue -gross profit

                                             = 427000-96250

                                             = 330750

Step 2 )Calculation of ending inventory:

cost of goods sold =cost of goods available for sale -ending inventory

   330750 = 419250 - ending inventory

   Ending inventory = 419250 -330750

                       = 88500

Step 3)Calculation of average inventory and then beginning inventory

    Inventory turnover ratio = cost of goods sold /average inventory

           4.2             = 330750 /average inventory

      Average inventory = 330750 /4.2

                                 = 78750

Now ,

Average inventory =[beginning inventory +ending inventory ]/2

78750 = [Beginning inventory + 88500]/2

Beginning inventory = (78750*2)- 88500

                      = 157500-88500

                      = 69000

Step 4)calculation of purchase discount:

Cost of goods available for sale =Beginning inventory + purchase+ Freight in -purchase return -purchase discount

419250 = 69000 + 392800 + 10980 - 16590 - purchase discount

419250 = 456190- purchase discount

Purchase discount= 456190 -419250

                     = 36940