Perpetual Inventory
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The following is a list of selected events for D Sales for 2008. D Sales uses a perpetual inventory system and had a zero inventory balance prior to these transactions.
1.) Purchased merchandise on account for 67,000
2.) Sold Inventory costing 48,000 for 88,000 on account
3.) Paid transportation-out cost of 3,500 on goods sold
4.) Paid salary expense of 25,000
5.) A count of the inventory revealed that there was 18,500 of inventory on hand at the end of 2008
A.) What was net income for 2008?
B.) Compute gross margin and gross margin percent for 2008
C.) What amount of inventory will appear on the balance sheet for 2008?
D.) Prepare an income statement for 2008?
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Solution Summary
This solution explains various calculation under the perpetual inventory system.
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A. Net Income = Sales - Expenses
Sales = 88,000
Expenses
Transportation out = 3,500
Salary Expense = 25,000
Cost of Goods Sold = 48,000
The ending inventory after sale should be ...
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