Question

Marketing and advertising costs	$54,000
Merchandise inventory, January 1, 2017	92,000
Shipping of merchandise to customers	2,000
Depreciation on Store Fixtures	9,000
Purchases	523,000
General and administrative costs	70,000
Merchandise inventory, December 31, 2017	109,000
Merchandise freight-in	22,000
Purchase returns and allowances	20,000
Purchase discounts	20,000
Revenues	630,000

The following data are for

MeedMeed

Retail Outlet Stores. The account balances​ (in thousands) are for

20172017.

LOADING...

​(Click the icon to view the​ data.)

Requirements

1.	Compute ​(a) the cost of goods purchased and ​(b) the cost of goods sold.
2.	Prepare the income statement for 20172017.

Requirement 1. Compute ​(a) the cost of goods purchased and ​(b) the cost of goods sold.

​(a) Begin by completing the schedule of cost of goods purchased.

Meed Retail Outlet Stores
Schedule of Cost of Goods Purchased
For the Year Ended December 31, 2017 (in thousands)
Purchases
Add:
Deduct:
Cost of goods purchased

Answer 1

Dear Student ,

Below answer - mainly calculate of cost of goods purchase and cost of goods sold with Income Statement . Please check line by line , Any doubt, please drop me message . I will support you accordingly.

Thank You !!

We need to calculate cost of goods Purchased , Cost of goods sold and Income Statement
Cost of goods Purchased mainly represents cost incurred to purchase input raw material
Cost of goods sold = Opening Inventory + Purchase - Closing Inventory
Company normally deduct cost of goods sold from revenue to derived Gross Profit of the
company	Amnt($)	Amnt($)
Purchase		5,23,000
Add
Merchandise freight In		22,000
Total Purchase		5,45,000
Less -
Purchase return & Allowance	20,000
Purchase discount	20,000
Total Retrun Purchase		40,000
Total Cost of goods Purchased		5,05,000
Now calculate cost of goods sold .
Opening Inventory 1st Jan '2017		92,000
Add
Cost of goods Purchased( as above)		5,05,000
Total goods available for sale		5,97,000
Less -
Closing Inventory as on 31st Dec '2017		1,09,000
Total Cost of goods Sold		4,88,000
Income Statement as on 2017	Amnt($)	Amnt($)
Revenue		6,30,000
Less -
cost of goods sold( as above)		4,88,000
Operating Profit		1,42,000
Less -
Marketing & Advertisement cost	54,000
Shipping & merchandise to customers	2,000
Depreciaiton on Stores Fixtures	9,000
General & Admin cost	70,000
Total cost		1,35,000
Net profit		7,000