Page 324 - Accounting Principles (A Business Perspective)

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merchandise to sell at a price yielding a gross margin of 30 per cent. Selected data for the first six months of 2009
are as follows:
First Second
Quarter Quarter
Sales $248,000 $256,000
Purchases 160,000 184,000
Purchase returns and allowances 9,600 11,200
Purchase discounts 3,200 3,520
Sales returns and allowances 8,000 4,800
Transportation-in 8,000 8,320
Miscellaneous selling expenses 25,600 24,000
Miscellaneous administrative expenses 9,600 8,000
The cost of the physical inventory taken 2008 December 31, was USD 30,400.
a. Indicate how income statements can be prepared without taking a physical inventory at the end of each of the

first two quarters of 2009.
b. Prepare income statements for the first quarter, the second quarter, and the first six months of 2009.
Cobb Company records show the following information for 2010:
Cost Retail
Sales $350,400
Purchases $2/0,000 420,000
Transportation-in 26,280 —
Merchandise inventory,
January 1 12,000 1/,400
Purchase returns 15,120 18,600
Compute the estimated year-end inventory balance at cost using the retail method of estimating inventory.

Alternate problems
Alternate problem A Harris Company reported net income of USD 312,000 for 2009, USD 324,000 for 2010,
and USD 348,000
Recently Harris corrected these inventory amounts. Harris used the correct 2011 December 31, inventory
amount in calculating 2011 net income.

Accounting Principles: A Business Perspective 325 A Global Text