Question

The following data are for Milton Department Store. The account balances​ (in thousands) are for 2014.

​(Click the icon to view the account​ balances.)

Requirements

1.	Compute ​(a) the cost of goods purchased and ​(b) the cost of goods sold.
2.	Prepare the income statement for2014 Requirement 1. Compute ​(a) the cost of goods purchased and ​(b) the cost of goods sold.

a) Calculate the cost of goods purchased by completing the schedule. ​(Leave any unused cells​ blank.)

Milton Department Store
Schedule of Cost of Goods Purchased
For the Year Ended December 31, 2014 (in thousands)
Add:
Deduct:
Cost of goods purchased TABLE Marketing, distribution, and customer-service costs $32,000 Merchandise inventory, January 1, 2014 25,000 Utilities 19,000 General and administrative costs 45,000 Merchandise inventory, December 31, 2014 34,000 Purchases 153,000 Miscellaneous costs 3,000 Transportation-in 7,000 Purchase returns and allowances 5,000 Purchase discounts 9,000 Revenues 315,000

Answer 1

a) Calculate the cost of goods purchased by completing the schedule.

Purchases	153000
Add: Transportation int	7000
Less: Purchase returns and allowances	(5000)
Less: Purchase discounts	(9000)
Cost of goods purchase	146000

Calculate cost of goods sold :

Cost of goods sold = Beginning inventory+cost of goods purchase-ending inventory

                             = 25000+146000-34000

Cost of goods sold = 137000

Prepare income statement

Revenue		315000
Less: Cost of goods sold		(137000)
Gross profit		178000
Less: Expenses
Marketing, distribution, and customer-service costs	(32000)
Utilities	(19000)
General and administrative costs	(45000)
Miscellaneous costs	(3000)	(99000)
Net operating income		79000