Microsoft Corporation

Annual Data:

• Beginning Inventory: $3,500,000
• Purchases: $12,000,000
• Ending Inventory: $3,200,000
• Net Sales: $20,000,000
• Operating Expenses: $5,400,000

Requirements:

1. Prepare the Cost of Goods Sold (COGS) statement.
2. Calculate the Gross Profit.
3. Compute the Inventory Turnover Ratio.
4. Draft a partial Income Statement showing Net Sales, COGS, and Gross Profit.
5. Discuss how Microsoft's inventory turnover ratio affects its product release schedule and market competitiveness.