Reference no: EM132853345

Question - Based on the following information, calculate Cost of Goods Sold for the month of June. Parker Corp. uses a periodic method of recording inventory. Beginning inventory (on 6/1/14) is $75,000. Parker Corp. made purchases of inventory during June of $250,000, but returned $5,000 to their supplier. They were charged freight-in of $2,500 and agreed to pay for delivery of sales made to customers (freight-out) which cost them $500. Finally, at June 30th, Parker Corp. counted ending inventory and determined they had $35,000 on hand.

Calculate the five critical subtotals in the multistep income statement based on the information provided in this table:

Sales 1,150,000

Sales returns 10,000

Sales discounts 15,000

Cost of Goods Sold 510,000

Total Operating Expenses 500,000

Interest Income 10,000

Interest Expense 15,000

Income Tax Expense 10,000

Amount:

a. Net Sales

b. Gross Profit

c. Income From Operations

d. Income Before Taxes

e. Net Income

3. Prepare ABC Co.'s journal entries for each of the following transactions. Assume that a perpetual inventory method is used.

Recording Purchases of Merchandise

a. ABC Co. purchases $15,000 of inventory on account, terms 3/10 net 30 from Train Company.

b. ABC Co. returns $1,500 of inventory to Train from the initial purchase.

c. ABC Co. pays the balance owed to Train Company, taking the discount.

Recording Sales of Merchandise

d. ABC Co. sells merchandise on account for $7,500 (terms 3/10 net 30) to Blue Co. The merchandise had cost ABC Co. $3,750.

e. Blue Co. returns $500 of the merchandise to ABC Co. Assume this returned merchandise had cost ABC Co. $300.

f. Blue Co. pays ABC Co. the balance owed within 10 days of the sale.