Following are the account balances from Jackson Company's income statement:

Given this information, the cost of merchandise available for sale during 2011 is

Question

Following are the account balances from Jackson Company's income statement:

Given this information, the cost of merchandise available for sale during 2011 is

Quizplus · Accepted Answer

The cost of merchandise available for sale can be calculated by adding the beginning inventory to the purchases during the period. In this case, the beginning inventory is not given, but the cost of goods sold and the gross profit are provided. We can use the gross profit method to calculate the beginning inventory.

Beginning inventory = Net sales - Gross profit - Cost of goods sold 
Beginning inventory = $89,000 - $31,000 - $24,000 = $34,000

Now we can calculate the cost of merchandise available for sale: 
Cost of merchandise available for sale = Beginning inventory + Purchases 
Cost of merchandise available for sale = $34,000 + $35,000 = $69,000

Therefore, the correct answer is C.

Following Are the Account Balances from Jackson Company's Income Statement