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    Cost of good sold and gross profit

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    At the end of Gordman Department store's fiscal year on December 31, 2008, these accounts appeared in its adjusted trial balance...
    Freight -in $5,600
    Merchandise Inventory 40,500
    Purchases 447,000
    Purchase Discounts 12,000
    Purchase returns and allowances 6,400
    Sales 718,000
    Sales Return and allowance 8,000

    Additional facts:
    1. Merchandise inventory on December 31, 2008 is $75,000.
    2. Note that Gordman Department store uses a periodic system.

    Prepare an income statement through gross profit for the year ended December 31, 2008.

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    Solution Preview

    In order to prepare the income statement we need to first calculate the cost of goods sold
    Cost of goods sold = Goods available for sale - ending ...

    Solution Summary

    The solution explains how to calculate the cost of goods sold and the gross profit