Sullivan Company uses the periodic inventory system.The following balances were drawn from the accounts of Sullivan Company prior to the closing process:

What is the gross margin that will be shown on the income statement?

Question

Sullivan Company uses the periodic inventory system.The following balances were drawn from the accounts of Sullivan Company prior to the closing process:

What is the gross margin that will be shown on the income statement?

Quizplus · Accepted Answer

Cost of goods sold = Beginning inventory + Purchases - Purchase returns and allowances - Purchase discounts + Transportation-in - Ending inventory
Cost of goods sold = $6,400 + $16,000 + $800 -$400 - $7,200 = $15,600
Gross margin = Net sales - Cost of goods sold
Gross margin = $24,000 - $15,600 = $8,400

Sullivan Company Uses the Periodic Inventory System