QUESTION 7 Beginning inventory for Viola Company at January

QUESTION 7 Beginning inventory for Viola Company at January 1, 2012, under the periodic inventory system is $25,000. Other information includes: ending inventory (12/31/12) was $20,000; purchases during 2012 were $40,000; purchases returns and allowances for 2012 were $1,500; purchase discounts for 2012 were $500; and transportation-in was $500. Net sales for 2012 were $80,000, and cash dividends declared and paid on common stock in 2012 were $1,000. The gross margin for Viola Company is $36,500 $44500 $36,000 Nohe of the above.

Solution

ANSWER: $ 36500 as explained below: Net sales 80000 Less: Cost of goods sold Beginning Inventory 25000 Add: Purchases 40000 Less: Purchase returns & allowances -1500 Less: Purchase discounts -500 Add:Transportation-in 500 Less: Ending Inventory -20000 43500 Gross Margin (80000-43500) 36500