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24 February, 03:47

Assume that Tracy Company uses a periodic inventory system and has these account balances: Purchases $440,600; Purchase Returns and Allowances $11,980; Purchase Discounts $8,247; and Freight-in $16,900. Tracy Company has beginning inventory of $57,710, ending inventory of $88,110, and net sales of $649,500.

Determine the amounts to be reported for cost of goods sold and gross profit.

Cost of goods sold:

Gross profit:

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Answers (1)
  1. 24 February, 03:52
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    (a) $406,873

    (b) $242,627

    Explanation:

    Given that,

    Purchases = $440,600;

    Purchase Returns and Allowances = $11,980;

    Purchase Discounts = $8,247; and

    Freight-in = $16,900.

    Beginning inventory = $57,710,

    Ending inventory = $88,110

    Net sales = $649,500

    Cost of goods sold:

    = Beginning inventory + Purchases + Freight-in - Purchase Returns and Allowances - Purchase Discounts - Ending inventory

    = $57,710 + $440,600 + $16,900 - $11,980 - $8,247 - $88,110

    = $406,873

    Gross profit:

    = Net sales - Cost of goods sold

    = $649,500 - $406,873

    = $242,627
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