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
Purchase Discounts 12,000
Purchase returns and allowances 6,400
Sales Return and allowance 8,000
1. Merchandise inventory on December 31, 2008 is $75,000.
2. Note that Gordman Department store uses a periodic system.
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 ...
The solution explains how to calculate the cost of goods sold and the gross profit