Slipper Electric uses the periodic inventory system. Slipper reported the following selected...
Question:
Slipper Electric uses the periodic inventory system. Slipper reported the following selected amounts at May 31, 2018.
| Merchandise Inventory, June 1, 2017 | $16,500 | Freight In | $6,500 |
| Merchandise Inventory, May 31, 2018 | $25,000 | Net Sales Revenue | |
| Purchases | $80,000 | Common Stock | $165,000 |
| Purchase Discounts | $4,500 | Retained Earnings | $24,000 |
| Purchase Returns and Allowances | $5,500 | $14,000 |
Compute the following for Slipper:
a. Cost of goods sold.
b. Gross profit.
Gross Profit:
The gross profit of a company can be calculated by deducting the cost of goods sold from sales revenue. Only the variable expenses are deducted from the sales revenue to calculate gross profit.
Answer and Explanation: 1
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Net purchases = Purchases - Purchase discounts - Purchase returns and allowances
Net purchases = $80,000 - $4,500 - $5,500
Net purchases =...
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