calculate Net Sales, Cost of Goods Sold, and Gross Margin. These three figures form the core of the calculations of profit, after the major expense of goods has been projected.

As you proceed through your calculations, remember to account for any additional expenses that reduce Gross Margin before determining a final dollar amount and percentage of profit.

Operating Statement Assignment

Use the numbers listed below to create an operating statement. Remember Gross Sales, customer returns and allowances, and Net Sales are retail dollars. Cost of Merchandise sold is given in cost figures. Expenses are shown as the actual cost of the expense.

Operating Statement

Using the following information supplied, determine if the jewelry department is operating at a profit or a loss

Gross Sales: $960,000

Returns and allowances are 5% of Gross Sales

Opening inventory at cost: $430,000

Purchases at cost: $438,000

Transportation charges: $ 32,000

Ending Inventory at cost: $380,000

Workroom expenses: $ 15,000

Cash Discounts earned: $ 49,000

Direct Expenses:

Buying salaries: $ 65,000

Selling salaries: $ 45,000

Department Advertising: $ 58,000

Warehouse or receiving Expense: $ 20,000

Indirect Expenses: Allocated

Executive salaries: $ 35,000

Rent: $ 26,000

Utilities: $ 18,000

Maintenance: $ 13,000