Selected data from Sheridan Corporation's year-end financial statements are presented below.The difference between average and ending inventory is immaterial.There were no prepaid expenses. Sheridan's sales for the year were:
A) $240,000.
B) $480,000.
C) $800,000.
D) $1,200,000.

Question

Selected data from Sheridan Corporation's year-end financial statements are presented below.The difference between average and ending inventory is immaterial.There were no prepaid expenses.  Sheridan's sales for the year were:
A) $240,000. 
B) $480,000. 
C) $800,000. 
D) $1,200,000.

Quizplus · Accepted Answer

Since we are given all the necessary financial statements except the income statement, we can use the formula:
Sales = Cost of Goods Sold + Gross Profit
We are given the beginning inventory, purchases, and ending inventory, so we can calculate the cost of goods sold:
Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold
$120,000 + $600,000 - $180,000 = $540,000
Now we can calculate sales:
Sales = $540,000 + $260,000 = $800,000
Therefore, the answer is C) $800,000.

Selected Data from Sheridan Corporation's Year-End Financial Statements Are Presented