5-12

Beginning inventory $ 250 $ 120 $ 700 $ (j)Purchases 1,500 1,080 (g) 43.590Purchase returns and allowances 80 (d) 290 (k)Net purchases (a) 1,040 7,410 42,290Freight-in 130 (e) (h) 2.240Cost of goods purchased (b) 1,230 8.050 (1)Cost of goods available for sale 1,800 1,350 (i) 49,530Ending inventory 310 (f) 1,150 6,230Cost of goods sold (e) 1,230 7,600 43,300InstructionsFill in the lettered blanks to complete the cost of goods sold sections.E5-12 Dorcas Corporation reported sales revenue of $257,000, net income of $45,300.cash of $9,300, and net cash provided 1w operating activities of $23,200. Accounts receivable have increased at three times the rate of sales during the last 3 years.Instructions(a) Explain what is meant by high quality of earnings.(b) Evaluate the quality of the company?s earnings. Discuss your findings.(e) What factors might have contributed to the company?s quality of earnings