Using the Following Data Taken from Payton Inc

question 182

Essay

Using the following data taken from Payton Inc. which uses a periodic inventory system, prepare the cost of merchandise sold section of the income statement for the year ended May 31. $$\begin{array} { | l | l | } \hline \text { Merchandise inventory, June 1 } & \$ 393,250 \\\hline \text { Merchandise inventory, May } 31 & 380,100 \\\hline \text { Purchases } & 1,579,600 \\\hline \text { Purchases returns and allowances } & 81,200 \\\hline \text { Purchases discounts } & 16,500 \\\hline \text { Sales } & 2,060,000 \\\hline \text { Freight-in } & 59,250 \\\hline\end{array}$$

---

Definitions:

Bonds

Bonds are fixed-income instruments that represent a loan made by an investor to a borrower, typically corporate or governmental, which pays periodic interest payments and the return of the principal at maturity.

Common Shares

Equity securities that represent ownership in a corporation, giving holders voting rights and a share of the company's profits through dividends.

Preferred Shares

Preferred shares are a class of ownership in a corporation that has a higher claim on assets and earnings than common shares, typically entitling shareholders to fixed dividends ahead of common stockholders.

Cost of Equity

The anticipated reward that a corporation offers to its stockholders in exchange for the risk they take by investing their capital.