Please help me solve this and show the steps. Thank you M7-13 Recording Journal

Question

Please help me solve this and show the steps. Thank you

M7-13 Recording Journal Entries for Purchases and Sales Using a Perpetual Inventory System ILO 7-2, LO 7-5U Inventory at the beginning of the year cost $14,000. During the year, the company purchased (on account) inventory costing $87,000. Inventory that had cost $83,000 was sold on account for $97,400. At the end of the year, inventory was counted and its cost was determined to be $18,000. a. Calculate the cost of goods sold Cost of Goods Sold b. What was the dollar amount of Gross Profit? Gross Profit

Explanation / Answer

A) COST OF GOOD SOLD = 83000

B) GROSS PROFIT = 14400

WORKING:

A) COST OF GOOD SOLD = BEGINNING INVENTORY + PURCHASE - ENDING INVENTORY

COST OF GOOD SOLD = 14000+87000 - 18000

COST OF GOOD SOLD = 83000

B) GROSS PROFIT = SALE - COST OF GOOD SOLD

GROSS PROFIT = 97400 -83000

GROSS PROFIT = 14400

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