Question

Using your accounting knowledge, fill in the blanks in the following separate income statements a through e. Identify any negative amount by putting it in parentheses.

	a	b	c	d	e
Sales	\(62,000	\)43,500	\(46,000	\)?	\(25,600
Cost of goods sold
Merchandise inventory beginning	8,000	17,050	7,500	8,000	4,560
Total cost of merchandise purchased	38,000	?	?	32,000	6,600
Merchandise inventory ending	?	(3,000)	(9,000)	(6,600)	(?)
Cost of goods sold	34,050	16,000	?	?	7,000
Gross profit	?	?	3,750	45,600	?
Expenses	10,000	10,650	12,150	3,600	6,000
Net income (Loss)	\)?	\(16,850	(\)8,400)	\(42,000	\)?

Short answer

Answer

	a	b	c	d	e
Sales	$62,000	$43,500	$46,000	$92,200	$25,600
Cost of goods sold
Merchandise inventory beginning	8,000	17,050	7,500	8,000	4,560
Total cost of merchandise purchased	38,000	1,950	43,750	32,000	6,600
Merchandise inventory ending	(11,950)	(3,000)	(9,000)	(6,600)	(4,160)
Cost of goods sold	34,050	16,000	42,250	46,600	7,000
Gross profit	27,950	27,000	3,750	45,600	18,600
Expenses	10,000	10,650	12,150	3,600	6,000
Net income (Loss)	$17,950	$16,850	($8,400)	$42,000	$12,000

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of Cost of Goods Sold

The cost directly incurred in the production process of the goods that have been sold” by the business entity is known as the cost of goods sold. It is reported in the calculation of gross profit.

Calculation for Section (a)

Calculation of ending inventory merchandise:

Particulars	Amount $
Beginning inventory	$8,000
Add: Cost of merchandise purchased	$38,000
Less: Cost of goods sold	(34,050)
Ending inventory	$11,950

Calculation of gross profit and net income:

Particulars	Amount $
Sales	$62,000
Less: Cost of goods sold	(34,050)
Gross profit	$27,950
Less: Expenses	($10,000)
Net income	$17,950

Calculation for Section (b)

Calculation of merchandise purchased:

Particulars	Amount $
Cost of goods sold	$16,000
Add: Ending inventory	3,000
Less: Beginning inventory	(17,050)
Merchandise purchased	$1,950

Calculation of gross profit:

Particulars	Amount $
Sales	$43,000
Less: Cost of goods sold	(16,000)
Gross profit	$27,000

Calculation of Section (c)

Calculation of cost of goods sold:

Particulars	Amount $
Sales	$46,000
Less: Gross profit	(3,750)
Cost of goods sold	$42,250

Calculation of merchandise purchased:

Particulars	Amount $
Cost of goods sold	$42,250
Add: Ending inventory	9,000
Less: Beginning inventory	(7,500)
Merchandise purchased	$43,750

Calculation for Section (d)

Calculation of cost of goods sold:

Particulars	Amount $
Beginning inventory	$8,000
Merchandise purchased	32,000
Less: Ending inventory	(6,600)
Cost of goods sold	$46,600

Calculation of sales:

Particulars	Amount $
Gross profit	$45,600
Add: Cost of goods sold	46,600
Sales	$92,200

Calculation for Section (e)

Calculation of ending inventory merchandise:

Particulars	Amount $
Beginning inventory	$4,560
Add: Cost of merchandise purchased	6,600
Less: Cost of goods sold	(7,000)
Ending inventory	$4,160

Calculation of gross profit and net income:

Particulars	Amount $
Sales	$25,600
Less: Cost of goods sold	(7,000)
Gross profit	18,600
Less: Expenses	(6,000)
Net income	$12,000