Question

Enter aill amounts as positive numbers Enter your aners 640 971 Purchase discounts 51

Answer 1

Ans-Calculate beginning inventory for 2018

First calculate net purchase:-

=(Purchases (gross) + Freight -in)- (Purchases discounts + Purchases return)

=($725,000+$32,000)-($37,000+$43,000)

=$757,000-$80,000

=$677,000

Beginning Inventory=Cost of goods available for sale-Net Purchases

=$971,000-$677,000

=$294,000

Calculate ending inventory for 2018:-

Ending Inventory= Cost of goods available for sale- Cost of goods sold

=$971,000-$684,000

=$287,000

Calculate the beginning inventory for 2019

The ending balance of 2018 becomes the beginning balance of 2019.Hence it is $287,000

Calculate cost of goods available for sales in 2019

Cost of goods available for sales= Cost of goods sold+ Ending Inventory

=$640,000+$230,000

=$870,000

Calculate purchases (gross) in 2019

Net purchases= Cost of goods available for sale-Beginning Inventory

=$870,000-$287,000

=$583,000

Purchases (gross)-

Purchases (gross)= Net Purchases +Purchase Discounts +Purchase returns -Freight-in

=$583,000+$34,000+$49,000-$51,000

=$615,000

Calculate cost of goods sold in 2020

Cost of goods sold = Cost of goods available for sale-Ending inventory

=$857,000-$197,000

=$660,000

Calculate purchase discounts for 2020:-

First calculate net purchases:-

Net purchases= Cost of goods available for sale- Beginning inventory

=$857,000-$230,000

=$627,000

Purchase discounts= (Purchases (gross) + Freight-in)- (Net purchases+ Purchase returns)

=($680,000+$35,000)- ($627,000+ $33,000)

=$715,000-$660,000

=$55,000

	2018	2019	2020
Beginning Inventory	294	287	230
Cost of goods sold	684	640	660
Ending Inventory	287	230	197
Cost of goods available for sale	971	870	857
Purchases (gross)	725	615	680
Purchase discounts	37	34	55
Purchase returns	43	49	33
Freight-in	32	51	35