Assume that Mitchell Company uses a periodic inventory system and has these account balances: Purchases $620,000 Purchase Returns and Allowances $25,000Purchases Discounts $11,000Freight-In $19,000Beginning inventory of $45,000Ending inventory of $55,000Net sales of $750,000Determine the amounts to be reported for cost ofgoods sold and gross profit.Calculation of cost of goods sold Inventory, beginning............................................................. $45,000Cost of goods soldPurchases............................................................................ $620,000Less: Purchases returns and allowances .......................... $25,000 Purchase discounts ................................................. 11,000 36,000Net purchases...................................................................... 584,000Add: Freight-In..................................................................... 19,000Cost of goods purchased..................................................... 603,000Cost of goods available for sale........................................... 648,000Inventory, ending................................................................. 55,000Cost of goods sold............................................................... $593,000Calculation of gross profitNet sales.............................................................................. $750,000Cost of goods sold............................................................... 593,000Gross profit..........................................................................
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