The information below is taken from the December 31, 2014 adjusted trial balance
ID: 2502781 • Letter: T
Question
The information below is taken from the December 31, 2014 adjusted trial balance of Rummer Company (all numbers are pre-tax):
Freight-in
$7,500
General and administrative expenses
50,000
Interest expense
15,000
Inventory, 1/1/14
140,000
Inventory, 12/31/14
165,000
Loss on sale of a major component of the business
15,000
Purchases
330,000
Purchases returns
5,000
Sales
700,000
Sales discounts taken
10,000
Selling expenses
25,000
The income tax rate is 30%. There were 25,000 shares of common stock outstanding throughout the year.
Required:
a. Prepare a schedule of the cost of goods sold.
b. Prepare a 2014 income statement for Rummer Company, using a single-step format (disregard earnings per share).
Freight-in
$7,500
General and administrative expenses
50,000
Interest expense
15,000
Inventory, 1/1/14
140,000
Inventory, 12/31/14
165,000
Loss on sale of a major component of the business
15,000
Purchases
330,000
Purchases returns
5,000
Sales
700,000
Sales discounts taken
10,000
Selling expenses
25,000
Explanation / Answer
a)
Beginning Inventory 140,000
Add: Purchases 330,000
Add: Freight-in 7,500
Less Purchases returns ( 5,000)
Cost of goods available for sales 472500
Less : Ending Inventory (165,000)
Cost of goods sold 307500
b) Sales 700,000
less: Sales discounts taken (10,000)
Net sales 690,000
Less Cost of goods sold (307500)
Gross profit 382500
Less
OPerating Expenses
General and administrative expenses 50000
Selling expenses 25000
Interest expense 15000
Total OPerating Expenses (90000)
Profit 292500
less: Loss on sale of a major (15000)
Net profit 277500
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.