Instructions Prepare the journal entries to record the transactions assuming the
ID: 2472271 • Letter: I
Question
Instructions Prepare the journal entries to record the transactions assuming the company uses a periodic inventory system. 2. The income statement of Miller, Inc. includes the items listed below: Net sales $900,000 Gross profit 315,000 Beginning inventory 100,000 Purchase discounts 15,000 Purchase returns and allowances 8,000 Freight-in 10,000 Operating expenses 300,000 Purchases 580,000 Instructions Use the appropriate items listed above as a basis for determining: (a) Cost of goods sold. (b) Cost of goods available for sale. (c) Ending inventory. Show supporting work –how you arrived at your answers. If no supporting work no credit.
Explanation / Answer
Answer a Gross profit % = Gross profit / Net sales Gross profit % = $315000 / $900000 = 35% Hence cost of goods sold % = 100 - 35 = 65% of sales Cost of goods sold = $900000 * 65% = $585000 Answer b Cost of goods available for sale In $ Beginning Inventory 100000 (+) Purchases 580000 (-) Purchase returns -8000 (-)purchases discount -15000 (+)Freight in 10000 (+) operating exp. 300000 Cos of goods available for sale 967000 Answer c Ending Inventory cost In $ Cos of goods available for sale 967000 Less : Cost of goods sold 585000 Ending Inventory cost 382000