Chevron Corporation

Annual Data:

• Beginning Inventory: $6,800,000
• Purchases: $20,000,000
• Ending Inventory: $6,300,000
• Net Sales: $32,000,000
• Operating Expenses: $9,500,000

Requirements:

1. Develop the Cost of Goods Sold (COGS) statement.
2. Compute the Gross Profit.
3. Calculate the Inventory Turnover Ratio.
4. Construct a partial Income Statement showing Net Sales, COGS, and Gross Profit.
5. Discuss how Chevron's inventory turnover ratio affects its exploration and production activities.