Answer to Question #239581 in Accounting for samantha

Question

find and fill the missing items.

2020, first half 2020, first half

Gross purchases P350,000

Purchase returns and discounts 8% of the overall purchases value

Beginning inventory P82,000

Ending inventory 30% higher than the beginning inventory

Net sales P910,000

Distribution expenses 25% of cost of goods sold

Administrative expenses 15% of gross profit

Income tax expense 20% of net income before taxes

Net income ? (1)

Cost of goods sold ? (2)

Gross profit ? (3)

Distribution expenses ? (4)

Income tax expenses ? (5)

Answer 1

Solution:

Cost of goods sold = Beginning inventory + net purchases – ending inventory

Beginning inventory = 82,000

Gross purchases = 350,000

Purchases returns & discounts = 350,000$\times 8\%$ = 28,000

Net purchases = Purchases – purchases returns & discounts = 350,000 – 28,000 = 322,000

Ending inventory = 82,000$\times 130\%$ = 106,600

Cost of goods sold = 82,000 + 322,000 – 106,600 = 297,400

Gross profit = Net sales – Cost of goods sold

Net sales = 910,000

Gross profit = 910,000 – 297,400 = 612,600

Distribution expenses = 25$\%$ of COGS = 297,400 $\times 25\%$ = 74,350

Administrative expenses = 15$\%$ of Gross profit = 612,600 $\times 15\%$ = 91,890

 

Net income before taxes = Gross profit – distribution expenses – administrative expenses

= 612,600 – 74,350 – 91,890 = 446,360

Net income before taxes = 446,360

Income tax expenses = 20$\%$ of net income before taxes = 446,360 $\times 20\%$ = 89,272

Net income = Net income before taxes – Income tax expenses = 446,360 – 89,272 = 357,088

Net income (1) = P357,088

 

Cost of goods sold (2) = P297,400

 

Gross profit (3) = P612,600

 

Distribution expenses (4) = P74,350

 

Income tax expenses (5) = P89,272