2-29 Computing cost of goods purchased and cost of goods sold. The following dat

Question

2-29 Computing cost of goods purchased and cost of goods sold. The following data are for Marvin Department Store. The account balances (in thousands) are for 2011.

2. Prepare the income statement for 2011.

1. Compute (a) the cost of goods purchased and (b) the cost of goods sold. Required

2. Prepare the income statement for 2011.

Marketing and advertising costs $24,000 Merchandise inventory, January 1, 2011 45,000 Shipping of merchandise to customers 2,000 Building depreciation $4,200 Purchases 260,000 General and administrative costs 32,000 Merchandise inventory, December 31, 2011 52,000 Merchandise freight-in 10,000 Purchase returns and allowances 11,000 Purchase discounts 9,000 Revenues 320,000

Explanation / Answer

Marvin Department Store All Amounts in $ thousands Cost of Goods Purchased Merhandise Inventory January 1 45000 Purchases 260000 305000 Merchandise Inventory December 31 52000 253000 Merhcandise Freight-in 10000 Purchase Returns and Allowances -11000 Purchase Discounts -9000 Cost of Goods Purchased 243000 Cost of Goods Sold Cost of Goods Purchased as above 243000 Marketing and Advertising Costs 24000 Shipping of Merchandise to Customers 2000 Cost of Goods Sold 269000

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