Question

Account Name Debit Credit Sales $200,000 Sales Returns & Allowances $10,000 Purchases 88,000 Purchase Returns and...

Account Name Debit Credit

Sales $200,000

Sales Returns & Allowances $10,000

Purchases 88,000

Purchase Returns and Allowances 18,000

Freight In 12,000

Selling Expenses 80,000

The year-end physical inventory counts were: Beginning $15,000, Ending $10,000. Net Income is:

a) $23,000

b) $47,000

c) $103,000

d) $33,000

e) $28,000

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Answer #2

Answer: A - $23,000

Net sales = Sales - Sales returns & allowances = $200,000 - $10,000 = $190,000

Net purchases = Purchases - Purchase returns & allowances = $88,000 - $18,000 = $70,000

Opening Inventory = $15,000

Ending inventory = $10,000

Direct expense = Freight in = $12,000

Gross Profit

= Net Sales + Ending inventory - Net purchases - Direct expenses - Opening inventory

= $190,000 + $10,000 - $70,000 - $12,000 - $15,000

= $103,000

Net Income

= Gross Profit - Selling expenses

= $103,000 - $80,000

= $23,000

answered by: anonymous
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