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24 June, 08:18

Assume that Crane Company uses a periodic inventory system and has these account balances: Purchases $630,000; Purchase Returns and Allowances $25,700; Purchases Discounts $10,900; and Freight-In $18,300; beginning inventory of $45,000; ending inventory of $64,600, and net sales of $760,000. Determine the amounts to be reported for cost of goods sold and gross profit.

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  1. 24 June, 08:40
    0
    Cost of goods sold = $61,5300

    Gross Profit = $144,700

    Explanation:

    Given the information:

    Purchase : $630,000 Purchase Returns and Allowances $25,700 Prchases Discounts $10,900 Freight-In $18,300 beginning inventory of $45,000 ending inventory of $64,600 net sales of $760,000

    As we the, the fomular for total Goods Available for Sale

    = Beginning Inventory + Purchases + Freight-In - Purchase Returns and Allowances - Purchases Discounts

    = $45,000 + $630,000 + $18,300 - $25,700 - $10,900

    = $67,9900

    => Cost of goods sold = Total Goods Available for Sale - ending inventory

    = $67,9900 - $64,600

    = $61,5300

    => Gross Profit = Net sales - Cost of goods sold

    = $760,000 - $61,5300

    = $144,700

    Hope it will find you well.
  2. 24 June, 08:48
    0
    The amounts to be reported for cost of goods sold: $592,100

    The amounts to be reported for gross profit: $167,900

    Explanation:

    Crane Company uses a periodic inventory system.

    Net Purchases = Purchases - Purchase Returns and Allowances - Purchases Discounts + Freight-In = $630,000 - $25,700 - $10,900 + $18,300 = $611,700

    Cost of goods sold = Beginning inventory + Net Purchases - Ending inventory = $45,000 + $611,700 - $64,600 = $592,100

    Crane Company has net sales of $760,000.

    Gross profit = Net sales - Cost of goods sold = $760,000 - $592,100 = $167,900
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