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Income Statement and Accounts for Merchandiser For the fiscal year, sales were $4,077,000 and the cost...

Income Statement and Accounts for Merchandiser

For the fiscal year, sales were $4,077,000 and the cost of goods sold was $2,324,000.

a. What was the amount of gross profit?
$

b. If total operating expenses were $604,000, could you determine net income?

c. Customer Refunds Payable is a(n) account.

What is its normal balance?

d. Estimated Returns Inventory is a(n) account.

What is its normal balance?

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Answer #1

Answer:

(a) Gross profit = Sales -   Cost of goods sold

                        = $4077000 - $2324000

                        = $17,53,000

(b) Net Income = Gross profit - Operating Expenses

                            $1753000 - $604000

                        = $11,49,000

(c ) Normal Balance of Customer Refund Payable is CREDIT.

(d) Normal balance of Estimated Return Inventory is DEBIT.

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