7 The trial balance of A. Wiencek Company at the end of its fiscal year, August

Question

7 The trial balance of A. Wiencek Company at the end of its fiscal year, August 3!, 017, includes these accounts: Inventory $19,500; Purchases $149,000 190,000; Freight-In $5,000; Sales Returns and Allowances $3,000; Freight-Out $1,000; and Purchase Returns and Allowances $2,000. The ending inventory is $23,00 ; Sales Revenue : Sales Returns and Allowances $3,000, Freight-Out $1,000; Lo 7) Instructions Prepare a cost of goods sold section for the year ending August 31 (periodic inventory). E5-18 On January 1, 2017, Brooke Hanson Corporation had inventory of $50,000. At Comp December 31, 2017, Brooke Hanson had the following account balances. statem (LO 7) Freight-in Purchases Purchase discounts Purchase returns and allowances Sales revenue Sales discounts Sales returns and allowances 4,000 509,000 6,000 2,000 840,000 5,000 10,000 At December 31, 2017, Brooke Hanson determines that its ending inventory is $60,000 Instructions (a) Compute Brooke Hanson's 2017 gross profit. (b) Compute Brooke Hanson's 2017 opera ting expenses if net income is $130,000 and there are no nonoperating activities.

Explanation / Answer

a) Compute gross profit :

b) Operating expense = 330000-130000 = $200000

Beginning inventory 50000 Net purchase Purchases 509000 Less: Purchase discount -6000 Less: Purchase return and allowance -2000 Add: Freight in 4000 Net Purchase 505000 Total cost of goods available for sale 555000 Less: Ending inventory -60000 Cost of goods sold 495000 Sales (840000-5000-10000) 825000 Gross profit 330000

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