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Alternate Demonstration Problem #1
Chapter Four
The following data was taken from ledger account balances and
supplementary data for the Whisk Company. Whisk Company uses
periodic inventory method to account for its inventory.
Merchandise inventory, beginning................................................ $ 20,000
Merchandise inventory, ending...................................................... 23,000
Purchases........................................................................................ 215,000
Purchases discounts...................................................................... 6,000
Purchases returns and allowances............................................... 3,000
Sales................................................................................................. 400,000
Sales discounts............................................................................... 3,200
Sales returns and allowances........................................................ 1,800
Transportation-in............................................................................. 10,000
Required:
Show the computation, in Income Statement format, of net sales, cost of
goods sold, and gross profit for the year ended December 31, 20XX.
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Solution: Alternate Demonstration Problem #1
Chapter Four
WHISK COMPANY
Income Statement
For the Year Ended December 31, 20XX
Revenue from sales:
Cost of goods sold:
Merchandise inventory, 1/1/XX 20,000
Purchases................................ $215,000
Less: Purchase discounts...... $6,000
Purchases returns and
allowances................. 3,000 9,000
Net purchases.......................... 206,000
Add transportation-in.............. 10,000
Cost of goods purchased....... 216,000
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Alternate Demonstration Problem #2
Chapter Four
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4-19
Solution: Alternate Demonstration Problem #2
Chapter Four
PERPETUAL INVENTORY SYSTEM PERIODIC INVENTORY SYSTEM
5-1 Inventory 20,000 5-1 Purchases 20,000
Accounts Payable 20,000 Accounts Payable 20,000
15 Accts Receivable 5,000 15 Accts Receivable 5,000
Sales 5,000 Sales 5,000
15 Cost of Goods Sold 3,000
Inventory 3,000
24 Cash 3,920 24 Cash 3,920
Sales Discount 80 Sales Discount 80
Accts Receivable 4,000 Accts Receivable 4,000
4-20
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