Best Brands’ general ledger and supplementary records at the end of its current period reveal the following.

Required

1. Each member of the team is to assume responsibility for computing one of the following items. You are not to duplicate your teammates’ work. Get any necessary amounts to compute your item from the appropriate teammate. Each member is to explain his or her computation to the team in preparation for reporting to the class.

a. Net sales      

b. Total cost of merchandise purchases 

c. Cost of goods sold

d. Gross profit

e. Net income

2. Check your net income with the instructor. If correct, proceed to step 3.

3. Assume that a physical inventory count finds that actual ending inventory is $76,000. Discuss how this affects previously computed amounts in step 1.

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Sales Sales returns. Sales discounts Cost of transportation-in Operating expenses $600,000 20,000 13,000 Merchandise inventory (beginning of period) Invoice cost of merchandise purchases Purchase discounts received $ 98,000 360,000 9,000 11,000 84,000 22,000 Prchase returns and allowances 50,000 Merchandise inventory (end of period)