Question

Freight-in $7,500 Inventory 40,000 Purchases 585,000 Purchase Discounts 6,300 Purchase Returns and Allowances 2,700 Sales Revenue 1,000,000 Sales Returns and Allowances 20,000 Additional facts: 1. Merchandise inventory on November 30, 2017, is $52,600. 2. Dayton Department Store uses a periodic system. Prepare an income statement through gross profit for the year ended November 30, 2017.

Answer 1

Dayton Department Store

Income statement for the year ended November 30, 2017

Sales Revenue 1,000,000

Less Sales Returns and Allowances (20,000)

Net Sales Revenue 980,000

Less Cost of Goods Sold :

Beginning Inventory 40,000

Add Purchases 585,000

Add Freight-in 7,500

Less Purchase Returns and Allowances (2,700) (629,800)

Gross Profit 350,200

Step-by-step explanation:

Periodic System calculates the value of inventory and cost of goods sold at the end of the reporting period, in this case November 30,2017.

Gross Profit is simply Sales less Cost of Goods Sold as calculated above