3 Computing cost of goods sold in a periodic inventory syste

3 Computing cost of goods sold in a periodic inventory system Clink Electric uses the periodic inventory system. Clink reported the following selected amounts at May 31, 2018: E5B-3 $ 6,000 138,000 32,000 17,000 Freight In Net Sales Revenue $ 16,000 Merchandise Inventory, June 1, 2017 Merchandise Inventory, May 31, 2018 Purchases Purchase Discounts Purchase Returns and Allowances 21,500 81,000 Common Stock 3,000 Retained Earnings 6,600 Compute the following for Clink: a. Cost of goods sold. b. Gross profit.

Solution

Rreq a: Schedule showing Cost of Goods sold: Beginning Inventory of Merchandise Inventory 16000 Add: Net Purchases Purchased 81000 Less: Discount -3000 Less: Purchase return and allowance -6,600 Add: Freight in 6,000 Net cost of Purchases 77400 Total cost of Goods available for sale 93400 Less: Merchandise Inventory at the end 21500 Cost of Goods sold 71900 Req b: Gross Profit: Sales revenue 138000 Less: Cost of Goods sold 71900 Gross Profit: 66100