Homework Help: Intro to Accounting

Posted by Darren on Tuesday, March 3, 2009 at 10:48pm.

Les Fleurs, a boutique in Paris, France, had the following accounts in its accounting records at December 31, 20X2 (amounts in Euros, denoted as "E")

Purchases………………...
E250,000 Freight In……………… E8,000
Sales discounts…………. 4,000 Purchase returns…….. 7,000
Inventory Sales…………………. 400,000
December 31, 20X1….. 20,000 Purchase discounts…. 3,000
December 31, 20X2….. 30,000 Sales returns…………. 8,000

Compute the following for Les Fleurs during 20X2: (Do not convert the figures to US dollars.)

Net sales revenue
Cost of goods sold
Gross profit

Intro to Accounting - Chopsticks, Tuesday, March 3, 2009 at 11:41pm
Net sales revenue = total generated from the companies products.

To calculate COGS:

You need to find the Goods available for sale (Beginning Inventory + Cost of Goods Purchased or Purchases)

After finding that

Goods available for sale - Ending Inventory = COGS

Gross Profit = Net Sales - COGS
Intro to Accounting - Chopsticks, Tuesday, March 3, 2009 at 11:45pm
Oh wait. Since you have Freight In

COGS = Beginning Inventory + Net purchases + Freight In - Ending Inventory

Net purchases = Purchases - Purchase returns and allowances - purchase
Intro to Accounting - Baby cakes, Friday, March 6, 2009 at 12:27am
NET SALES REVENUE:
Inventory Sales…………………. 400,000
Less: Sales discounts…………. 4,000
Less: Sales returns…………. 8,000

Net Sales Revenue = 388,000

COGS = Opening Inventory + Net Purchases - Ending Inventory

COGS Calculation:

December 31, 20X1….. 20,000
Add Net Purchases 248,000
Less December 31, 20X2….. 30,000
TOTAL COGS = 238,000

Net Purchases is calculated as:
Purchases………………... E250,000
Less: Purchase returns…….. 7,000
Less: Purchase discounts…. 3,000
Add: Freight In……………… E8,000
Net Purchases = 248,000

GROSS PROFIT = 388,000 – 238,000 = 150,000

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