Question

In: Finance

Question # 1: A retailer has yearly sales of $650,000. Inventory on January 1 is $250,000...

Question # 1: A retailer has yearly sales of $650,000. Inventory on January 1 is $250,000 (at cost). During the year, $500,000 of merchandise (at cost) is purchased. The ending inventory is $275,000 (at cost). Operating costs are $90,000. a. Calculate the cost of goods sold b. Calculate the net profit

Solutions

Expert Solution

a.
Inventory on January 1 250000
(+) Merchandise purchased 500000
(-) Endign inventory 275000
Cost of goods sold 475000
b.
Sales 650000
(-) Cost of goods sold 475000
Gross profit 175000
(-) Operating costs 90000
Net profit 85000

Related Solutions

A retailer has yearly sales of $650,000. Inventory on January 1 is $260,000 (at cost). During...
A retailer has yearly sales of $650,000. Inventory on January 1 is $260,000 (at cost). During the year, $500,000 of merchandise (at cost) is purchased. The ending inventory is $265,000 (at cost). Operating costs are $90,000. a. Calculate the cost of goods sold b. Calculate the net profit
1.A firm estimates sales of $250,000 in December, $275,000 in January; $225,000 in February, $300,000 in...
1.A firm estimates sales of $250,000 in December, $275,000 in January; $225,000 in February, $300,000 in March, $350,000 in April; $280,000 in May; and $300,000 in June. November sales were $225,000. The firm typically collects 20% of its sales in cash; 50% are accounts receivable paid the month after the sale; and 30% are accounts receivable paid two months after the sale. The firm’s cost of goods sold (raw materials) amounts to 70% of its sales. The raw materials are...
Question text Inventory Costing Methods—Perpetual Method Chou Sales Corporation uses the perpetual inventory system. On January...
Question text Inventory Costing Methods—Perpetual Method Chou Sales Corporation uses the perpetual inventory system. On January 1, 2018, Chen had 1,000 units of product A with a unit cost of $20 per unit. A summary of purchases and sales during 2018 follows: Unit Cost Units Purchased Units Sold Feb.2 400 Apr.6 $22 1,800 July 10 1,600 Aug.9 25 800 Oct.23 800 Dec.30 28 1,400 Required a. Assume that Chou uses the first-in, first-out method. Compute the cost of goods sold...
14.       Cleaverland purchased 100% of Omaha on January 1, 2019 for $650,000. On that date,...
14.       Cleaverland purchased 100% of Omaha on January 1, 2019 for $650,000. On that date, Omaha's stockholders' equity was $650,000, and the recognized book values of Ottowa’s individual net assets approximated their fair values. Omaha had net incomes of $150,000 and $190,000 for 2019 and 2020, respectively. The subsidiary paid dividends amounting to $30,000 in both years. Cleaverland uses the equity method to account for its pre-consolidation investment in Omaha. What was the balance in Equity Investment at December...
On January 1, Year 1, Victor Company issued bonds with a $650,000 face value, a stated...
On January 1, Year 1, Victor Company issued bonds with a $650,000 face value, a stated rate of interest of 6%, and a 5-year term to maturity. The bonds sold at 95. Interest is payable in cash on December 31 of each year. Victor uses the straight-line method to amortize bond discounts and premiums. What is the carrying value of the bond liability at December 31, Year 3?
On January 1, Year 1, Victor Company issued bonds with a $650,000 face value, a stated...
On January 1, Year 1, Victor Company issued bonds with a $650,000 face value, a stated rate of interest of 6%, and a 5-year term to maturity. The bonds sold at 95. Interest is payable in cash on December 31 of each year. Victor uses the straight-line method to amortize bond discounts and premiums. What is the amount of interest expense appearing on the income statement for the year ending December 31, Year 3?
On January 1, 2012, Vallahara Company purchased machinery for $650,000, which it installed in a rented...
On January 1, 2012, Vallahara Company purchased machinery for $650,000, which it installed in a rented factory. It is depreciating the machinery over 12 years by the straight-line method to a residual value of $50,000. Late in 2016, because of increasing competition in the industry, the company believes that its asset may be impaired and will have a remaining useful life of 5 years, over which it estimates the asset will produce total cash inflows of $1,000,000 and will incur...
Joe’s Dry Dock Co. purchased equipment on January 1, 2015, at a cost of $650,000. The...
Joe’s Dry Dock Co. purchased equipment on January 1, 2015, at a cost of $650,000. The equipment was estimated to have a 12-year life with a residual value of $50,000. Fisher uses straight-line depreciation. At the beginning of 2020, Joe’s revised its total estimated life to total 10 years, with no residual value. Required: Prepare journal entries to record Joe's depreciation expense for both 2019 and 2020.
On January 1, 2012, Vallahara Company purchased machinery for $650,000, which it installed in a rented...
On January 1, 2012, Vallahara Company purchased machinery for $650,000, which it installed in a rented factory. It is depreciating the machinery over 12 years by the straight-line method to a residual value of $50,000. Late in 2016, because of increasing competition in the industry, the company believes that its asset may be impaired and will have a remaining useful life of 5 years, over which it estimates the asset will produce total cash inflows of $1,000,000 and will incur...
Inventory Costing Methods-Periodic Method Chen Sales Corporation uses the periodic inventory system. On January 1, 2012,...
Inventory Costing Methods-Periodic Method Chen Sales Corporation uses the periodic inventory system. On January 1, 2012, Chen had: 1,000 units of product A with a unit cost of $30 per unit. A summary of purchases and sales during 2012 follows: Unit Cost Units Purchased Units Sold Feb.2 400 Apr.6 $32 1,800 July 10 1,600 Aug.9 36 800 Oct.23 800 Dec.30 39 1,200 Required Assume that Chen uses the first-in, first-out method. Compute the cost of goods sold for 2012 and...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT