8. Assume ZY company has beginning inventory 60,000, ending inventory 90,000,and net sales 680,000. Determine the amount to be reported for cost of goods sold and gross profit.
To determine the cost of goods sold, we use the formula:
Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory
Given that the beginning inventory is 60,000 and the ending inventory is 90,000, we can substitute these values into the formula:
Cost of Goods Sold = 60,000 + Purchases - 90,000
To find the purchases, we need to rearrange the formula:
Purchases = Cost of Goods Sold + Ending Inventory - Beginning Inventory
Substituting the values, we get:
Purchases = Cost of Goods Sold + 90,000 - 60,000
Purchases = Cost of Goods Sold + 30,000
Now we have all the necessary information to calculate the cost of goods sold.
Next, to determine the gross profit, we use the formula:
Gross Profit = Net Sales - Cost of Goods Sold
Given that the net sales are 680,000, we can substitute this value into the formula:
Gross Profit = 680,000 - Cost of Goods Sold
Now, we can find the cost of goods sold and then determine the gross profit.
Let's solve for the cost of goods sold:
Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory
Cost of Goods Sold = 60,000 + Purchases - 90,000
To find the purchases, we rearrange the formula:
Purchases = Cost of Goods Sold + Ending Inventory - Beginning Inventory
Purchases = Cost of Goods Sold + 90,000 - 60,000
Purchases = Cost of Goods Sold + 30,000
Now we have all the necessary information to calculate the cost of goods sold.
Using the purchases formula, we have:
Cost of Goods Sold = 60,000 + (Cost of Goods Sold + 30,000) - 90,000
Cost of Goods Sold = Cost of Goods Sold + 60,000 - 90,000 + 30,000
Cost of Goods Sold - Cost of Goods Sold = -90,000 + 30,000 + 60,000
0 = 0
It appears that there is no definitive value for the cost of goods sold based on the given information. Therefore, we cannot determine the gross profit either.