Problem: Develop and analyze this material to understand every detail and be ready for what continues.
I. Presented below is financial information for two different companies.
New York Florida
Company Company
Sales 90,000 (d)
Sales Returns (a) 5,000
Net Sales 81,000 95,000
Cost of Goods Sold 56,000 (e)
Gross Profit (b) 38,000
Operating Expenses 15,000 (f)
Net Income (c) 18,000
Instructions:
a. Determine the missing amounts.
b. Determine the gross profit rate. (Round to one decimal places)
II. On October 6, Lopez Company buys merchandise on accounts from Tavares Company. The selling price of the goods is $5,000, and the cost to Tavares Company is $3,000. On October 8, Lopez returns defective goods with a selling price of $700 and a scrap value of $250. Record the transactions on the books of Lopez Company and Tavares Company.
III. The information for Xanadu Inc. for the month ended in April 30, 2013 is (the company uses the periodic method for inventory):
Unit Cost or
Date Description Quantity Selling Price
1-Apr Beginning Inventory 40 40
4-Apr Purchase 135 44
10-Apr Sale 110 70
11-Apr Sale return 15 70
18-Apr Purchase 55 46
18-Apr Purchase return 10 46
25-Apr Sale 65 75
28-Apr Purchase 30 50
Instructions:
a) Calculate the ending inventory, cost of goods sold, gross profit and gross profit rare under each of the following methods
1. LIFO
2. FIFO
3. Aver