Chapter 5 Problems

The following amounts relate to Amato Company for the current year: beginning Inventory, $20,000; ending inventory, $28,000; purchases, $166,000; purchase returns, $4,800; and freight-out, $6,000. The amount of cost of goods sold for the period is

Cost of Goods Sold = beginning inventory ($20,000) + purchases ($166,000) - purchase returns and allowances ($4,800) + freight-in ($0) - ending inventory ($28,000). This response incorrectly included freight-out ($6,000).

Villa Sales Company had the following amounts related to its business: Beginning inventory, $12,000; Purchases, $42,000; Net sales, $50,000; and Gross profit, $15,000. The amount of the ending inventory is

Cost of goods sold = net sales ($50,000) - gross profit ($15,000) = $35,000. Ending inventory = beginning inventory ($12,000) + cost of goods purchased ($42,000) - cost of goods sold ($35,000) = $19,000

Which of the following appears on both a single-step and a multiple-step income statement?

Cost of goods sold.

Which of the following is shown on both a multiple-step and a single-step income statement?

Net Sales

In determining cost of goods sold in a periodic system:

freight-in is added to net purchases.

Which of the following is shown on the income statement of both merchandising and service companies?

operating expenses

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

purchase returns and allowances

When goods are purchased for resale by a company using a periodic inventory system:

purchases on account are debited to Purchases