Question

solve it 1, 2 , 4

Chap. 5 - Merchandising Operations & Multiple-Step Income Statement 1. What journal entries are used to record the sale of inventory? Prepare the journal entries for a company that sold inventory for $1,000 that had a cost of $500. 2. What is gross profit and how is it calculated? If sales revenues are $30,000, cost of goods sold is $10,000 and operating expenses are $5,000, what is the gross profit? 3. Familiarize yourself with the multiple-step income statement on page 245 (III. 5-11). 4. Calculate cost of goods sold under the periodic system if beginning inventory is $50,000, cost of goods purchased is $15,000, and ending inventory is $20,000.

Answer 1

As requested, questions 1, 2 & 4 were answered.

1)

1)
Account Titles and Explanations	Debit	Credit
Accounts Receivable	$1,000
Sales Revenue		$1,000
(To record the sale of inventory)
Cost of Goods Sold	$500
Merchandise Inventory		$500
(To record the cost of goods sold)

2)

Gross profit is calculated by deducting the cost of goods sold from the sales revenue, the same is shown below -

2)
Sales Revenue	$30,000
Less: Cost of Goods Sold	($10,000)
Gross Profit	$20,000

4)

4)
Beginning Inventory	$50,000
Add: Cost of Goods Purchased	$15,000
Total cost of goods available for sale	$65,000
Less: Ending Inventory	($20,000)
Cost of Goods Sold	$45,000

Note: As requested, only questions 1, 2 & 3 were answered.