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

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

Net Sales Revenue
Sales ………………………………… 400,000
Less Sales Returns…………………... (8,000)
Less Sales Discounts………………….. (4,000)
Net Sales Revenue…………………… 388,000
COGS
Beginning Inv. Dec. 31, 2001 ………… 20,000
Add/ Purchases……………………….. 240,000 (250,000 – 7000 – 3000 = Purchases)
Add/ Freight in………………………….. 8,000
(Less) Ending Inv. Dec.31, 2002... …… (30,000)
Total COGS………………………... 238,000
Gross Profit
Net Sales Revenue……………………. 388,000 (400,000 – 8000 – 4000 = Net Sales)
(Less) COGS………………………… (238,000)
Total Gross Profit…………………….. 150,000



Net Income
Revenue………………………………. 150,000
(Less) Admin. Expenses……………... (20,000)
Total Net Income……………………… 130,000
Balance Sheet
December 31, 2002
Cash…………………………………… 130,000
Inventory……………………………….. 30,000
Owner's Equity……………………………………. 160,000
Statement of Owner's Equity
Beg. Equity at Dec 31, 2001……………... 30,000
Plus Net Income... ………………………. 130,000
Ending Equity at Dec. 31, 2002………… 160,000

The thread is two years old.

The thread may be two years old but it is still a question asked in college courses being taken today. Thanks :o)

I just received your other comment motgaine... I will discontinue using this site. Thanks for the input. ;o)

You're leaving cause I told you what our guidelines about homework are and therefore to please not just give answers away? Well, OK, whatever...

BTW, those of us who hang out here don't like old threads dug up, not to mention that I've never been on a forum yet where people didn't dislike that. Around here, they'll even sometimes close them off when you do that.