Question

Panamerican Foods reported the following account balances on the company’s adjusted trial balance. Accounts Payable $ 6,000 Accounts Receivable 25,000 Inventory 22,800 Advertising Expense 19,000 Cost of Goods Sold 145,000 Delivery Expense 7,400 Income Tax Expense 2,000 Insurance Expense 1,000 Rent Expense 17,600 Sales Revenue 300,000 Sales Discounts 9,600 Sales Returns & Allowances 40,000 Net income would be:

• $100,000.

• $105,400.

• $98,000.

• $134,200.

• None of the other answers are correct.

Answer 1

Option (e) is correct

None of the answers given are correct.

Net income will be $58400

We will prepare the income statement to find the net income as per below:

Income statement:

Description	Amount	Amount
Revenues:
Sales Revenue	$300000
Less: Sales discounts	($9600)
Less: Sales returns and allowances	($40000)
Net sales	$250400
Total revenues		$250400
Expenses:
Cost of goods sold	$145000
Advertising expense	$19000
Delivery expense	$7400
Insurance expense	$1000
Rent expense	$17600
Income tax expense	$2000
Total expenses & othe items		($192000)
Net income		$58400