Accumulated depreciation Beginning inventory Ending Inventor

Accumulated depreciation Beginning inventory Ending Inventory $ 780 5,000 1,780 1,450 ,980 9,589 Net Purchases Net Sales Expenses 12,580 14,000 Prepaid rent Accounts peyeble 1,380 Required a. Compute gross profit, the goods avalilable for sale, and the cost of goods sold for the merchandiser necessary b. Use the above information from a service company and froma Hint Not all information may be merchandiser to compute net income a. Goods available or sale Cost of goods sold Gross proft DOL

Solution

Solution: (a) Goods available for sale = Beginning Inventory + Net Purchases

= 5,000 + 3,900 = 8,900

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

= 5,000 +3,900 - 1,700 = 7,200

Gross Profit = Net Sales - Cost of goods sold

= 9,500 - 7,200 = 2,300

(b) Net Income for Krug service company = Revenue- Expense

= 14,000- 12,500 = 1,500

Net Income for Kleiner marchandiser = Gross Profit- Expenses

= 2,300 -1,450 =850