Week 3 Assignment E5-2 Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred.Sept. 6 Purchased calculators from Dragoo Co. at a total cost of $1,650, terms n/30. 9 Paid freight of $50 on calculators purchased from Dragoo Co. 10 Returned calculators to Dragoo Co. for $66 credit because they did not meet specifications. 12 Sold calculators costing $520 for $690 to Fryer Book Store, terms n/30. 14 Granted credit of $45 to Fryer Book Store for the return of one calculator that was not ordered. The calculator cost $34. 20 Sold calculators costing $570 for $760 to Heasley Card Shop, terms n/30. E5-6 Presented below is information for Zhou Co. for the month of January 2014.Cost of goods sold $212,000 Rent expense $ 32,000Freight-out 7,000 Sales discounts 8,000Insurance expense 12,000 Sales returns and allowances 20,000Salaries and wages expense 60,000 Sales revenue 370,000 Instructions (a) Prepare an income statement using the format presented on page 245. Assume a 25% tax rate. (b) Calculate the profit margin and the gross profit P5-5B An inexperienced accountant prepared this condensed income statement for Wright Company, a retail firm that has been in business for a number of years. WRIGHT COMPANY Income Statement For the Year Ended December 31, 2014 Revenues net sales $952,000 Other revenues 16,000 968,000 Cost of goods sold 548,000 Gross profit 420,000 Operating expenses selling expenses 160,000 Administrative expenses 104,000 264,000 Net earnings $156,000 As an experienced, knowledgeable accountant, you review the statement and determine the following facts. 1. Net sales consist of sales $972,000, less freight-out on merchandise sold $20,000. 2. Other revenues consist of sales discounts $12,000 and interest revenue $4,000. 3. Selling expenses consist of salespersons salaries $88,000; depreciation on equip-ment $4,000; sales returns and allowances $46,000; advertising $12,000; and sales commissions $10,000. All compensation should be recorded as Salaries and Wages Expense. 4. Administrative expenses consist of office salaries $54,000; dividends $14,000; utili-ties $13,000; interest expense $3,000; and rent expense $20,000, which includes prepayments totaling $2,000 for the first month of 2015. The utilities represent utilities paid. At December 31, utility expense of $3,000 has been incurred but not paid. P6-2B Lifetime Distribution markets classic childrens books. At the beginning of June, Lifetime had in beginning inventory 1,200 books with a unit cost of $3. During June, Life-time made the following purchases of books. June 3 4,000 @ $3 June 29 4,000 @ $6 June 18 7,500 @ $5 During June, 10,500 books were sold. Lifetime uses a periodic inventory system. Instructions (a) Determine the cost of goods available for sale. (b) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. ( Note: For average-cost, round cost per unit to three decimal places.)(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement.