In: Accounting
Question text
XYZ Products, Selected Accounts from the Adjusted Trial Balance dated December 31, 2018 (for its year ended December 31, 2018).
Sales $385,000
Sales returns 12,000
Inventory 32,692
Purchase discounts 2,000
Purchase returns 5,000
Transportation-in 2,346
Josh Mayer, capital 16,270 CR
Sales discounts 7,400
Depreciation expense 10,000
Purchase allowances 4,000
Sales allowances 3,000
Purchases 218,000
Property tax expense 14,625
Store supplies expense 3,814
Wages expense 66,601
REQUIRED (NOTE THAT ALL ACCOUNTS HAVE THEIR NORMAL DEBIT OR CREDIT BALANCES):
The inventory on hand at December 31, 2018 was $24,388.
Part A. Using the PERIODIC SYSTEM, prepare ONLY the part of a classified, multiple-step Income Statement that includes the SALES, COST OF GOOD SOLD, and GROSS PROFIT sections
Part B. Calculate the gross margin % (also known as the gross profit %) .
Part C. Prepare the first closing entry under the PERIODIC SYSTEM that closes the temporary accounts with credit balances and sets up ending inventory - NEED A DATE, but NO EXPLANATION REQUIRED
Part D. Prepare the second closing entry under the PERIODIC SYSTEM that closes the temporary accounts with debit balances and removes beginning inventory - NEED A DATE, but NO EXPLANATION REQUIRED
Part E. What is the net income for the year? - USE THE CLOSING ENTRIES TO CALCULATE THIS AMOUNT
Part A:Multi-Step Income Statement that includes Sales,Cost Of Goods Sold and Gross Profit only.
Part B:The Gross Profit or Gross Margin percentage highlights the relationships between net sales revenue and cost of goods sold.The gross profit % is often expressed as a percentage of sales.It indicates the percentage of each sales dollar available to cover other expenses and provide a profit.
The gross profit is computed as follows:
Gross Profit % = Gross Profit /Net Sales
= 144,950/362,600 = 0.40 or 40%
Part C:
Part D:
Part E:Net Income=Revenue- Expenses
= $420,388- $370,478
= $49,910