Question

Greg Company started the year with inventory of $75,000 and ended the year with $50,000 of inventory. If Greg had net purchases of $300,000 for the year, what was the cost of goods sold? Markus Company started the year with $50,000 of inventory and purchased $200,000 of merchandise during the year. If the cost of goods sold was $225,000, what was Markus's ending inventory? Ray Company had $950,000 of sales during the year and had selling expenses of $200,000 and general administrative expenses of $250,000. Also, Ray started the year with $70,000 of inventory and ending the year with $90,000 of inventory. Rays net purchases for the year were $350,000. What is Rays gross profit and net income for the year? Dorgan had a net income of $70,000. He also had operating expenses of $250,000 and a cost of goods sold of $450,000. What was Dorgan's gross profit and sales for the year?

Answer 1

1.

Beginning inventory = $75,000

Ending inventory = $50,000

Net Purchases = $300,000

Cost of goods sold = Beginning inventory + Net Purchases - Ending inventory

= 75,000 + 300,000 - 50,000

= $325,000

2.

Beginning inventory = $50,000

Ending inventory = ?

Net Purchases = $200,000

Cost of goods sold = $225,000

Cost of goods sold = Beginning inventory + Net Purchases - Ending inventory

225,000 = 50,000 + 200,000 - Ending inventory

Ending inventory = $25,000

3.

Beginning inventory = $70,000

Ending inventory = $90,000

Net Purchases = $350,000

Cost of goods sold = Beginning inventory + Net Purchases - Ending inventory

= 70,000 + 350,000 - 90,000

= $330,000

Sales = $950,000

Gross profit = Sales - Cost of goods sold

= 950,000 - 330,000

= $620,000

Selling expenses = $200,000

General and administrative expenses = $250,000

Net income = Gross profit - Selling expenses - General and administrative expenses

= 620,000 - 200,000 - 250,000

= $170,000

4.

Net income = $70,000

Operating expenses = $250,000

Cost of goods sold = $450,000

Gross profit = Net income + Operating expenses

= 70,000 + 250,000

= $320,000

Sales = Cost of goods sold + Gross profit

= 450,000 + 320,000

= $770,000

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