Question

Kleiner Merchandising Company
Accumulated depreciation $700
Beginning inventory 11,000
Ending Inventory 6,600
Expenses 2,050
Net Purchases 13,500
Net Sales 21,500

Krug Service Company
Expenses $9,700
Revenues 26,000
Cash 900
Prepaid rent 880
Accounts payable 200
Equipment 2,500


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. Use the above information from a service company and from a merchandiser to compute net income.

Answer 1

Answer:

Part a. Compute the goods available for sale, and the cost of goods sold and gross profit for the merchandiser

Goods available for sale

$24,500

Cost of goods sold

$17,900

Gross profit

$3,600

Part b. Use the above information from a service company and from a merchandiser to compute net income

Kleiner Merchandising Company

Net Income = $ 1,550

Krug Service Company

Net Income =  $ 16,300

Explanation:

Part a. Compute the goods available for sale, and the cost of goods sold and gross profit for the merchandiser

Goods available for sale

Beginning inventory           11,000

Add Net Purchases            13,500

Goods Available for Sale  24,500

Cost of goods sold

Goods Available for Sale  24,500

Less Ending Inventory       (6,600)

Cost of goods sold             17,900

Gross profit

Net Sales                             21,500

Less Cost of goods sold   ( 17,900)

Gross profit                           3,600

Part b. Use the above information from a service company and from a merchandiser to compute net income

Kleiner Merchandising Company Calculation of Net Income

Gross profit                           3,600

Less Expense                      (2,050)

Net Income                            1,550

Krug Service Company Calculation of Net Income

Revenues          26,000

Less Expenses   9,700

Net Income        16,300