P5-6 (a-d)

P5-6 (a-d) - P5-6A (a-d) Kristen Montana operates a retail...

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Unformatted text preview: P5-6A (a-d) Kristen Montana operates a retail clothing operation. She purchases all merchandise inventory on credit and uses a periodic inventory system. The accounts payable account is used for recording inventory purchases only; all other current liabilities are accrued in separate accounts. You are provided with the following selected information for the fiscal years 2005, 2006, 2007, and 2008. 2005 2006 2007 2008 Inventory (ending) $13,000 $11,300 $14,700 $12,200 Accounts payable (ending) 20,000 Sales 225,700 227,600 219,500 Purchase of merchandise inventory on account 146,000 145,000 129,000 Cash payments to suppliers 135,000 161,000 127,000 Calculate cost of goods sold for each of the 2006, 2007, and 2008 fiscal years. 2006 Beginning inventory $ 13000 Plus: Purchases 146000 Cost of goods available 159000 Less: Ending inventory 11300 Cost of goods sold $ 147700 2007 $ 11300 145000 156300 14700 $ 141600 2008 $ 14700 129000 143700 12200 $ 131500 Calculate the gross profit for each of the 2006, 2007, and 2008 fiscal years. 2006 Sales $ 225700 Less: Cost of goods sold 147700 Gross profit $ 78000 2007 $ 227600 141600 $ 86000 2008 $ 219500 131500 $ 88000 Calculate the ending balance of accounts payable for each of the 2006, 2007, and 2008 fiscal years. 2006 2007 Beginning accounts payable $ 20000 $ 31000 Plus: Purchases 146000 145000 Less: Payments to suppliers 135000 161000 Ending accounts payable $ 31000 $ 15000 2008 $ 15000 129000 127000 $ 17000 Sales declined in fiscal 2008. Does that mean that profitability, as measured by the gross profit rate, necessarily also declined? Calculate the gross profit rate for each fiscal year. (Round answers to 1 decimal place, e.g. 10.5.) 2006 2007 2008 Gross profit rate 34.6 % 37.8 % 40. % ...
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P5-6 (a-d) - P5-6A (a-d) Kristen Montana operates a retail...

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