Question Thefollowing information was taken from Jackson Company\'s accountingre

Question

Question

Thefollowing information was taken from Jackson Company's accountingrecords for 2007:

salesrevenue ............................. $325,000

freight-in................................     ?

purchasereturns ..........................    7,000

rentexpense ..............................    44,000

beginninginventory .......................    19,000

net income................................   104,000

bad debtexpense ..........................    25,000

purchases.................................    86,000

freight-out...............................      ?

gain onsale of investments ...............    5,000

salesdiscounts ...........................    14,000

allowancefor doubtful accounts ...........    17,000

purchasediscounts ........................    4,000

income taxexpense ........................    45,000

endinginventory ..........................     ?

grossprofit ..............................   230,000

Jackson Company reported an inventory turnover ratio of3.6 during 2007.

Calculatethe amount of freight-in reported byJackson Company during 2007. Do not use decimals
in your answer.

Question

Explanation / Answer

Freight -in    $ 13,000 Explanation Sales Revenue        325,000 - Sales discounts       14,000 NetSales                                   311,000 - Cost of goods sold Beginning Inventory     19,000 + Purchases 86,000 -P.returns    ( 7,000) -P.discounts ( 4,000) + freight-in    13,000   88,000                                  107,000 -end.Inventory             26,000      Cost of goods sold    81,000 GrossProfit                                230,000 Expenses Freight-out           17,000 Rent expense        44,000 Baddebts             25,000             86,000 Income fromoperations              144,000 Other gains and revenue Gain onsale                                  5,000 Income beforetaxes                   149,000 -taxexpenses                               45,000 NetIncome                                104,000 TO check your answer, it is given inventory turnover ratio is3.6 Inventory Turnover formula cost of goods sold = 3.6 Av.Inventory Cost of goods sold / 3.6 = Average inventory 81,000 / 3.6 = 22,500 Average inventory is Beg. inventory + ending inventory                 2 19,000 + 26,000 = 22,500.         2

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