Intro to Accounting

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

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asked by Darren
  1. 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

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  2. Oh wait. Since you have Freight In

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

    Net purchases = Purchases - Purchase returns and allowances - purchase

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  3. 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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