Lewis Incorporated and Clark Enterprises Cost of Sales Report
What are the amounts reported by Lewis Incorporated and Clark Enterprises for the year?
Calculate the cost of sales for each company
- a. Lewis $189,000 Clark $225,000
- b. Lewis $171,000 Clark $117,600
- c. Lewis $213,000 Clark $333,000
- d. Lewis $213,000 Clark $225,000
The cost of sales for Lewis Incorporated and Clark Enterprises is calculated using their opening inventory, purchases, purchase returns, and ending inventory. The cost of sales for Lewis is $171,000 and for Clark, it's $117,600.
Explanation: The cost of sales for a company can be calculated using the formula: Cost of Sales = Opening Inventory + Purchases - Purchase Returns - Ending Inventory. For Lewis Incorporated, the cost of sales is calculated as follows: Cost of Sales = $18,000 (Opening Inventory) + $174,000 (Purchases) - $9,000 (Purchase Returns) - $12,000 (Ending Inventory) = $171,000. Similarly, for Clark Enterprises, the cost of sales is calculated as follows: Cost of Sales = $44,000 + $181,600 - $54,000 - $54,000 = $117,600. Therefore, the cost of sales for Lewis Incorporated is $171,000 and for Clark Enterprises, it's $117,600.
Cost of sales is an important financial metric that helps businesses determine their profitability and efficiency in managing inventory. By understanding the cost of sales, companies can make informed decisions to improve their operations and increase their overall financial performance.