Question

Alpha Company provided the following data concerning its income statement: sales, $860,000; purchases, $410,000; beginning inventory, $235,000; ending inventory, $282,000; operating expenses, $111,000; freight-in, $5,000; sales discounts, $21,000; purchases discounts, $15,000; sales returns & allowances, $113,000; and purchases returns & allowances, $32,000. The data are complete and provide the basis for preparation of an income statement. How much is net income?

Answer 1

Income Statement
Sales	860,000
Less: Sales returns and allowances	-113,000
Less: Sales discount	-21,000
Net sales		726,000
Cost of goods sold:
Beginning inventory	235,000
Add: Purchases	410,000
Less: Purchase return and allowances	-32,000
Less: Purchase discount	-15,000
Add: Freight in	5,000
Less: Ending inventory	-282,000
Cost of goods sold		-321,000
Gross profit		405,000
Less: Operating expenses		-111,000
Net income		$294,000

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