Question

Patterson Company had the following account balances at the end of the year: Additional Resources Beginning...

Patterson Company had the following account balances at the end of the year:

Additional Resources

Beginning Inventory

$37,000

Purchases Returns and Allowances

$4000

Ending Inventory

42,600

Purchases

72800

Freight-In

3,400

Sales Discounts

5800

General and Administrative Expenses

15,400

Sales Returns and Allowances

5900

Interest Revenue

1,840

Sales

197400

Interest Expense

1,630

Selling Expenses

19800

Purchase Discounts

3,600

Required:

Compute the following:

  1. Cost of goods sold
  2. Net income, given that income from operations is $87,500.

Homework Answers

Answer #1
(a) Cost of Goods Sold $ 63,000 =37000+72800+3400-4000-3600-42600
( Beginning Inventory + Purchases + Freight In - Purchase return -Purchase Discount - Ending Inventory )
(b) Income from Operations          87,500
Less: Interest Expense           -1,630
Add: Interest revenue            1,840
Net Income $ 87,710
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