Question

Sarasota Corp. uses a periodic inventory system and reports the following information: sales $1,830,000; sales returns and allowances $128,000; sales discounts $31,000; purchases $883,000; purchase returns and allowances $14,000; purchase discounts $15,000; freight in $18,000; freight out $39,000; beginning inventory $94,000; and ending inventory $78,000. Assuming Sarasota uses a multiple-step income statement.

Could you show me the steps? Thanks :)

Answer 1

Cost of goods Purchased	872000
Cost of goods sold	888000
Gross Profit	783000

Sarasota Corp.
Income statement
Sales Revenue
Sales		1830000
Less: Sales returns and allowances	128000
Less: Sales discounts	31000
Net sales Revenue			1671000
Less: Cost of Goods Sold:
Beginning Inventory		94000
Cost of goods Purchased:
Add: Purchases	883000
Less: Purchase returns and allowances	14000
Less: Purchase discounts	15000
Add: Freight in	18000
Cost of goods Purchased		872000
Inventory available for sale		966000
Less: Ending Inventory		78000
Cost of goods sold			888000
Gross Profit			783000