Question

Given the following information:

Beginning Inventory	$ 52,000
Ending Inventory	20,800
Sales	214,400
Purchases	69,600
Sales Returns and Allowances	3,600
Purchase Discounts	2,400
Transportation-In	4,400
Purchase Returns and Allowances	3,600
Sales Discounts	1,920

Required:
a.     Determine net sales
b.     Determine net cost of purchases
c.     Determine gross margin
d.     Determine cost of goods available for sale
e.     Determine cost of goods sold

(Show your work for each calculation labeling each amount included.)

Answer 1

Solution: A
	Calculation of Net Sales
	Sales	$             214,400
	Less: Sales Returns and Allowances	$                 3,600
	Less: Sales Discounts	$                 1,920
	Net Sales	$             208,880
Solution: B
	Calculation of Net Cost of Purchases
	Purchases	$               69,600
	Add: Transprtation - in	$                 4,400
	Less: Purchase Discount	$                 2,400
	Less: Purchase Returns and Allowances	$                 3,600
	Net Cost of Purchases Purchases	$               68,000
Solution: C , D & E
	Calculation of Gross Margin ,COGS & Cost of goods available for sale
		Amount	Amount
	Net Sales		$            208,880
	Less: Cost of Goods Sold
	Beginning inventory	$               52,000
	Add: Net Purchases	$               68,000
	Total Goods Available for Sale	$             120,000
	Less: Ending Inventory	$               20,800
	Cost of goods Sold		$              99,200
	Gross Margin		$            109,680
	Gross Margin % =Gross Margin / Net Sales		52.51%