Question

Kleiner Merchandising Company Accumulated depreciation $ 700 Beginning inventory 5,000 Ending inventory 1,700 Expenses 1,450 Net purchases 3,900 Net sales 9,500 Krug Service Company Expenses $ 12,500 Revenues 14,000 Cash 700 Prepaid rent 800 Accounts payable 200 Equipment 1,300 Required: a. Compute the goods available for sale, and the cost of goods sold and gross profit for the merchandiser. Hint: Not all information may be necessary. b. Compute net income for each company.

Answer 1

Find below properly indented question:

Kleiner Merchandising Company

Accumulated depreciation $ 700

Beginning inventory 5,000

Ending Inventory 1,700

Expenses 1,450

Net Purchases 3,900

Net Sales 9,500

Krug Service Company

Expenses $ 12,500

Revenues 14,000

Cash 700

Prepaid rent 800

Accounts payable 200

Equipment 1,300

Merchandiser:

cost of goods available is $8,900

Cost of goods sold is $7,200

Gross profit is $2,300

Net income is $850

Krug Service company:

Net income is$1,500

Step-by-step explanation:

Merchandiser:

Cost of goods available=beginning inventory+net purchases

costs of goods available=$5,000+$3,900=$8,900

Cost of goods sold=cost of goods available-ending inventory

cost of goods sold=$8,900-$1,700=$ 7,200.00

Gross profit =net sales-cost of goods sold

gross profit=$9,500-$7,200=$2,300

Net income=gross profit-expenses

net income=$2,300-$1450=$850

Krug Service company

Net income=revenue-expenses=$14,000 -$12,500=$1,500