Question

2014 2015

Sales $200,000 $150,000

Beginning inventory (a)______ (e)_______

Purchases, net 40,000 40,000

Ending inventory 25,000 5,000

Cost of goods sold (b)______ 60,000

Gross profit 65,000 (f)______

Operating expenses (c)______ (g)_______

Income before taxes (d)______ 40,000

Income tax expense (30%) 14,100 (h)_______

Net income (loss) 32,900 (i)________

Can you add your work for each missing blank please!

Required: Fill in the blanks for the missing data.

Answer 1

Answer:

		2014		2015
Sales		200,000		150,000
Beginning Inventory	a	120,000	e	25,000
Purchase		40,000		40,000
Ending Inventory		25000		5000
Cost of goods sold	b	135,000		60,000
Gross profit		65000	f	90,000
Operating expenses	c	18000		50,000
Income before taxes	d	47000	g	40,000
Income tax expense (30%)		14100	h	12000
Net income (loss)		32900	i	28,000

Working notes for the above answer:

(b)

Cost of goods sold

=Sales-gross profit

=200,000-65,000

=$135,000

_________

(a)

Begining Inventory

=Cost of goods sold+ ending Inventory- purchase

=135,000+25,000-40,000

=120,000

_______________________

(D)

Income before taxes   

= Income tax expense / 30%

=14100/30%

=470,000

____________________

(C)

Operating expenses

= Gross profit- Income before taxes

=65,000-47,000

=18,000

________________________________________________________

  (e)

Beginning Inventory

=Cost of goods sold+ ending Inventory- purchase

=60,000+5000-40,000

=25,0000

________________

(f)

Gross Profit

=Sales-cost of goods sold

=90,000

_________________

(g)

Operating expenses

= Gross profit- Income before taxes

=90,000-40,000

=50,000

__________________

(h)

Income tax expense (30%)

= Income before taxes*30%

=40,000*30%

=12,000

___________________

(i)

Net income (loss)

= Income before taxes- Income tax expense (30%)

=40,000-12,000

=28,000