As part of a loan agreement with a local bank, Brazos Company must present quarterly and cumulative income statements for the year 2009. The company uses periodic inventory procedure and marks its 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 Quarter |
Second 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.