Question

Arigato LLC sells standard kitchen cabinets. The following information summarizes Arigato's operating activities for the year:

Selling and Administrative Expenses	$42,755
Purchases	85,777
Net Sales Revenue	154,501
Merchandise Inventory, January 1	12,533
Merchandise Inventory, December 31	16,277
Cash from Operating Activities	11,211
Loss from Discontinued Operations, Net of Tax	30,123
Arigato sold 953 cabinets during the year and recorded 44 returned/defective cabinets

Compute Arigato's Gross Profit for the year: $  Blank 1. Fill in the blank, read surrounding text.

Compute Arigato's Operating Income for the year:   $  Blank 2. Fill in the blank, read surrounding text.

Use “-“ sign for negative amount, as needed. Use commas, as needed.

Answer 1

Requirement 1:

Gross Profit = $72,468

Calculations:

Sales revenue		$ 154,501
Cost of goods sold:
Merchandise inventory, January 1	$ 12,533
Add: Purchases	$ 85,777
(Less): Merchandise inventory, December 31	($ 16,277)
Cost of goods sold		$ 82,033
Gross profit		$ 72,468

Requirement 2:

Operating Income = $29,713

Calculations:

Sales revenue		$ 154,501
Cost of goods sold:
Merchandise inventory, January 1	$ 12,533
Add: Purchases	$ 85,777
(Less): Merchandise inventory, December 31	($ 16,277)
Cost of goods sold		$ 82,033
Gross profit		$ 72,468
Operating expense:
Selling and Administrative Expenses		$ 42,755
Operating Income		$ 29,713