Reference no: EM131533098

Question: Best Brands' general ledger and supplementary records at the end of its current period reveal the following.

Sales . . . . . . . . . . . . . . . . . . . . . $430,000

Merchandise inventory (beginning of period) . . . . . . $ 49,000

Sales returns . . . . . . . . . . . . . . 18,000

Invoice cost of merchandise purchases . . . . . . . . . . . 180,000

Sales discounts . . . . . . . . . . . . 6,600

Purchase discounts received . . . . . . . . . . . . . . . . . . . . 4,500

Cost of transportation-in . . . . 11,000

Purchase returns and allowances . . . . . . . . . . . . . . . . 5,500

Operating expenses . . . . . . . . 20,000

Merchandise inventory (end of period) . . . . . . . . . . . 42,000

Required: 1. Each member of the team is to assume responsibility for computing one of the following items. You are not to duplicate your teammates' work. Get any necessary amounts to compute your item from the appropriate teammate. Each member is to explain his or her computation to the team in preparation for reporting to the class.

a. Net sales

b. Total cost of merchandise purchases e. Net income

c. Cost of goods sold

d. Gross profit

2. Check your net income with the instructor. If correct, proceed to step 3.

3. Assume that a physical inventory count finds that actual ending inventory is $38,000. Discuss how this affects previously computed amounts in step 1.