Solution-Compute the cost of goods sold

Compute the cost of goods sold

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Reference no: EM131714118

Question -

Marketing and advertising costs	$ 48,000
Merchandise inventory, January 1, 2014	90,000
Shipping of merchandise to customers	4,000
Building depreciation	8,400
Purchases	520,000
General and administrative costs	64,000
Merchandise inventory, December 31, 2014	104,000
Merchandise freight-in	20,000
Purchase returns and allowances	22,000
Purchase discounts	18,000
Revenues	640,000

Montgomery Retail Outlet Stores Schedule of Cost of Goods Purchased For the Year Ended December 31, 2014 (in thousands)
Purchases		$520,000
Add fright-in		20,000
		540,000
Deduct:
Purchase returns and allowances	$22,000
Purchase discounts	18,000
Cost of goods purchased		$500,000

1. Compute the Cost of Goods Sold. Explain the steps you used to make the computation. Use illustrations from the chapter readings and the additional information for the brief.

2. Prepare the simple Income Statement, using the information shown above in the additional information for the brief.

3. Compute the amount of merchandise inventory to be shown on the January 1, 2015, Balance Sheet. Explain the steps you used to make the computation. Use illustrations from the chapter readings and the additional information for the brief.

4. Write a 1-page analysis. Complete sentences must be used (bullets not acceptable).

Reference no: EM131714118

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Compute the cost of goods sold

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