1. The following information (ALL IN $THOUSANDS) comes from the 2001
annual report of Amazon.com, Inc.:

Net sales                                                $3,122,433
Total sales                                              $1,637,547
end of yr balance in cash and cash equivalents (CCE)     $540,282
total stockholders' equity (deficit)                     ($1,440,000)
gross profit                                              $798,558
net decrease in CCE                                       $282,153
operating expense                                         $1,210,815
net decrease in CCE from operating activities             $119,782
other income and gains                                    $29,103
other expenses and losses                                 $184,123

Compute the 2001 cost of goods sold for Amazon.com.

2. Alpaca Corporation had revenues of $200,000 in its first year of
operations. They have not collected on $20,000 of their sales, and
still owe $25,000 on $70,000 of merchandise they purchased. The
company paid $15,000 in salaries. The company has $10,000 in inventory
at the end of the year. Owners invested $20,000 in the business and
$20,000 was borrowed on a five-year note. The company paid $2,000 in
interest and paid $6,000 for a two-year insurance policy on the first
day of business. Alpaca has an effective tax rate of 40% and made
estimated tax payments of $45,000 during the year.

Compute the cash balance at the end of the first year for Alpaca Corporation.

Bizzz0 ?

Merrill Lynch?s venerable publication, which I?d recommend printing
out and keeping in a binder, is an excellent resource for financial
analysis and accounting:

Merrill Lynch
?How to Read a Financial Report? (undated)
http://philanthropy.ml.com/ipo/resources/pdf/howtoreadfinreport.pdf

As you can see on page xx of the PDF file, Sales ? Cost of Sales =
Gross Profit.  ?Cost of sales? is often also ?cost of goods sold? or
COGS.

So Amazon?s COGS = $2,323,875 (in thousands)

And you can check the math here by going to page 47 of the Amazon
annual report for 2002 (which has 2001) data ?

SEC Edgar Database
Amazon.com 2002 Form 10-K
http://www.sec.gov/Archives/edgar/data/1018724/000095014903000355/v87419ore10vk.htm

---

Alpaca Corp.

BEGINNING CASH: 0

CASH IN: 
  Sales: $180,000
  Owners: $20,000
  Bank loan: $20,000

TOTAL CASH IN: $220,000

CASH OUT:
  Merchandise: $45,000
  Salaries: $15,000
  Interest: $2,000
  Insurance: $6,000
  Taxes: $45,000

TOTAL CASH OUT: $113,000

ENDING CASH BALANCE: $220,000 - $113,000 =  $107,000

For Alpaca, this of course is not the income statement ? actual income
will be higher because of the inventory still being held and the
pre-paid insurance policy.


Best regards,

Omnivorous-GA

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Clarification of Answer by omnivorous-ga on 28 Sep 2005 11:39 PDT

That should read: 

"As you can see on page 28 of the PDF file, Sales ? Cost of Sales =
Gross Profit."

Best regards,

Omnivorous-GA

fast repsond and excellent research link to answer

In addition to Omnivorous's answer, you can also refer to:
Spiceland, Sepe, Tomassini, Intermediate Accounting, Third Edition,
McGraw-Hill Inc., 2004.
Which has these as questions for Chapter 1.

come on - do your own homework man!