Use this information to answer the following four questions. Account Name Sales

Question

Use this information to answer the following four questions. Account Name Sales Sales Returns and Allowances 10,000 Purchases 68,000 Purchases Returns and Allowances Freight-In 12,000 Selling Expenses 30,000 General and Administrative Expenses 110 In addition, beginning merchandise inventory was S22,000 and ending merchandise inventory was $14,000. 9. Debit Credit 321,000 9,000 ,000 Net sales for the period were A) $321,000 B) $291,000. C) $311,000 D) $313,000 10. Net cost of purchases for the period were A) $91,000 B) $59,000. C) $71,000 D) $83,000. 11. Cost of goods sold for the period was A) $79,000 B) $67,000 C) $93,000 D) $63,000

Explanation / Answer

Net Sales = Sales – Sales return and allowances

Sales = 321000

Sales return and allowances = 10000

Net Sales = 321000-10000 = 311000

Net Sales = 311000 (Option C)

Net Cost of Purchase = Purchase – purchase return and allowances

Purchase = 68000

Purchase return and allowances = 9000

Net Cost of Purchase = 68000-9000 = 59000

Net Cost of Purchase = 59000 (Option B)

Cost of goods sold = Opening Inventory + Net Cost of purchases + Direct Expense – Closing inventory

Opening Inventory = 22000

Net Cost of purchases = 59000

Direct Expense = 12000 (Freight in)

Closing inventory =14000

Cost of goods sold = 22000+59000+12000-14000 = 79000

Cost of goods sold = 79000 (Option A)

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