Given the following and Using the Gross Profit Method, fill in the missing numbe

Question

Given the following and Using the Gross Profit Method, fill in the missing numbers. Show all calculations Full Year, Last Yr. 1st 6 Mos, this yr. Sales Revenue 1,352,500 824,100 Cost of G.S.- Beg. Invent. 172,411 Purchases 872,400 725,000 Cost of Invent. Avail for Sale 1,044,811 Less cost of ending invent. 244,801 Cost of Goods Sold 800,010 Gross Margin 552,490 Oper. Expenses 463,111 275,000 Oper. Income/Loss 89,379 Given the following and Using the Gross Profit Method, fill in the missing numbers. Show all calculations Full Year, Last Yr. 1st 6 Mos, this yr. Sales Revenue 1,352,500 824,100 Cost of G.S.- Beg. Invent. 172,411 Purchases 872,400 725,000 Cost of Invent. Avail for Sale 1,044,811 Less cost of ending invent. 244,801 Cost of Goods Sold 800,010 Gross Margin 552,490 Oper. Expenses 463,111 275,000 Oper. Income/Loss 89,379

Explanation / Answer

Gross profit ratio = 552,490/1,352,500 = 0.4085

1st six months this year:

Sales = 824,100

Beginning inventory = ending inventory of last year = 244,801

Purchases = 725,000

Goods available for sale = purchases + beginning inventory = 725,000 + 244,801 = 969,801

Ending inventory = Goods available for sale – cost of goods sold = 969,801 – 487,455 = 482,346

cost of goods sold = sales*(1-gross profit ratio) = 824,100*.5915 = 487,455

Gross margin = sales – cost of goods sold = 824,100 – 487,455 = 336,645

Operating expesnes = 275,000

Operating Income = gross margin – operating expenses = 336,645 – 275,000 = 61,645

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