Question

Exercise 2: Inventory-Related Calculations in a Periodic System

The Travalent Company uses the periodic inventory system.  The following information is taken from their records. Certain data have been intentionally omitted.

Required: Compute the missing numbers.

	2018	2019	2020
Sales	$4,000	$4,200
Sales Discounts	(20)	(25)	(30)
Sales Returns	(10)	(20)	(15)
Net Sales
Beginning Inventory	1,000		1,345
Purchases	3,000		2,700
Freight-In	150	200	250
Purchase Returns	(200)	(250)	(200)
Purchase Discounts	(100)	(150)
Net Purchases		3,000
Cost of Goods Available for Sale			3,800
Ending Inventory	1,200
Cost of Goods Sold			2,600
Gross Profit		1,300	1,350

Answer 1

--Requirement

	2018	2019	2020
Sales	$4,000	$4,200	$3,995
Sales Discounts	($20)	($25)	($30)
Sales Returns	($10)	($20)	($15)
Net Sales	$3,970	$4,155	$3,950
Beginning Inventory	$1,000	$1,200	$1,345
Purchases	$3,000	$3,200	$2,700
Freight-In	$150	$200	$250
Purchase Returns	($200)	($250)	($200)
Purchase Discounts	($100)	($150)	($295)
Net Purchases	$2,850	$3,000	$2,455
Cost of Goods Available for Sale	$3,850	$4,200	$3,800
Ending Inventory	$1,200	$1,345	$1,200
Cost of Goods Sold	$2,650	$2,855	$2,600
Gross Profit	$1,320	$1,300	$1,350

--Calculations

	2018	2019	2020
Sales	4000	4200	=3950+30+15
Sales Discounts	-20	-25	-30
Sales Returns	-10	-20	-15
Net Sales	=4000-20-10	=4200-25-20	=2600+1350
Beginning Inventory	1000	1200	1345
Purchases	3000	=3000+150+250-200	2700
Freight-In	150	200	250
Purchase Returns	-200	-250	-200
Purchase Discounts	-100	-150	=(2700+250-200-2455)*-1
Net Purchases	=3000+150-200-100	3000	=3800-1345
Cost of Goods Available for Sale	=1000+2850	=1200+3000	3800
Ending Inventory	1200	1345	=3800-2600
Cost of Goods Sold	=3850-1200	=4155-1300	2600
Gross Profit	=3970-2650	1300	1350