4. The following account titles and balances were taken from the adjusted trial

Question

4. The following account titles and balances were taken from the adjusted trial balance of Omar Farm Co. for 2014. The company uses the periodic inventory system. Account Title Sales returns and allowances Miscellaneous expense Transportation-out Sales Advertising expense Salaries expense Transportation-in Purchases Interest expense Merchandise inventory, January 1 Rent expense Merchandise inventory, December 31 Purchase returns and allowances Loss on sale of land Utilities expense Balance S 6,500 800 1,400 139,500 5,500 17,000 3.450 84,000 720 12.400 10,000 8,100 2.500 6,800 1,420 a. Prepare a schedule to determine the amount of cost of goods sold OMAR FARM CO. Schedule of Cost of Goods Sold For the Year Ended December 31, 2014 Cost of goods available for sale Cost of goods sold

Explanation / Answer

SCHEDULE OF COST OF GOODS SOLD Purchases 84000 Less: returns and allowances -2500 Add: Transportation cost in 3450 Total cost of purchasses 84950 Add: Beginning raw material 12400 Total cost of goods available ffor sale 97350 Less: ending raw material 8100 Cost of goods sold 89250 INCOME STATEMENT Sales: Gross sales 139500 Less: Returns and allowances -6500 Net sales 133000 Less: Cost of goods sold 89250 Gross margin 43750 Lees: Operating expense Transportation-out 1400 Misc expense 800 advertsiement expense 5500 Salaries and wages expense 17000 Rent expense 10000 Utilities expense 1420 Total operating expense 36,120 Net Operating income 7,630 Non-operating itmes Interest expense 720 Loss on sale of land 6800 Net income 110

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