Operating costs
Marketing, distribution, and customer
service costs
$37,000
Utilities
17,000
General and administrative costs
43,000
Miscellaneous costs
4,000
Total operating costs
101,000
Operating income
$ 34,000
2-30 (20 min.) Cost of goods purchased, cost of goods sold, and income statement.
The following data are for Montgomery Retail Outlet Stores. The account balances (in thousands)
are for 2014.
Required:
1. Compute (a) the cost of goods purchased and (b) the cost of goods sold.
2. Prepare the income statement for 2014.
SOLUTION
1a. Montgomery Retail Outlet Stores
Schedule of Cost of Goods Purchased
For the Year Ended December 31, 2014
(in thousands)
Purchases
$520,000
Add freight—in
20,000
540,000
Deduct:
Purchase returns and allowances
$22,000
Purchase discounts
18,000
40,000
Cost of goods purchased
$500,000
Marketing and advertising costs
$ 48,000
Merchandise inventory, January 1, 2014
90,000
Shipping of merchandise to customers
4,000
Building depreciation
8,400
Purchases
520,000
General and administrative costs
64,000
Merchandise inventory, December 31, 2014
104,000
Merchandise freight–in
20,000
Purchase returns and allowances
22,000
Purchase discounts
18,000
Revenues
640,000
