Question
Prepare a multiple-step income statement for Armour Co. from the following data for the year ended December 31, 2010. Sales, $905,000; cost of merchandise sold,
Prepare a multiple-step income statement for Armour Co. from the following data for the year ended December 31, 2010.
Sales, $905,000; cost of merchandise sold, $540,000; administrative expenses, $10,000; interest expense, $20,000; rent revenue, $25,000; sales returns and allowances, $35,000; selling expenses, $90,000.
Which of the following costs would be included in merchandise inventory?
(a) | Purchase price |
(b) | Insurance in transit |
(c) | Freight for delivery FOB shipping point |
(d) | Repair due to negligence of receiving clerk |
(e) | Receiving Department employee salary |
(f) | Cost of processing purchase orders |
For each of the following, calculate the cost of inventory reported on the balance sheet.
(a) | The total merchandise on hand at the end of the year as determined by taking a physical inventory is $62,000. Of the $62,000, $8,000 has been sold FOB destination and is awaiting pickup by the carrier. |
(b) | The total merchandise inventory counted at the end of the year was $63,000. Purchases for $6,000 are in transit under FOB shipping point terms. |
(c) | The total merchandise inventory counted at the end of the year was $75,000. Purchases for $5,000 are in transit under FOB destination terms. |
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ANSWERS 1 C Freight for delivery FOB shipping point Free on Board FOB is a shipment term used to indicate whether the seller or the buyer is liable fo...Get Instant Access to Expert-Tailored Solutions
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