Question

Use the following financial information to find the entry you would make on an income statement for NET INCOME (LOSS) for the year ended December 31, 2006: Gross sales, $110,000; sales returns and allowances, $8,000; sales discounts, $2,400. Merchandise inventory, January 1, 2006, $50,000; merchandise inventory, December 31, 2006, $43,100; net purchases, $80,500; freight in, $975; salaries, $92,900; rent, $15,500; utilities, $1,275; insurance, $2,450; and income tax, $15,650.

Answer 1

Answers Income statement For the year ended December 31, 2006 Amount($) Amounted Gross sales $ 110,000 Less: sales returns and allowances $18,000) Less: sales Discounts &(2,400) ... Net sales $99,600 Less: cost of goods sold Merchandise inventory Jan 1, 2006 $50,000 Adó: purchases (net) $80,500 Add Freight in $ 975 Less: Merchandise inventory Dec 31, 2006 $(43,100) $(88,375) Gross profit $11,225 Less: Operating Escpenses $(112,125) I ho came from operations $100,500) Less: Income Taz $115,650) .. Net Incomel (Loss) $1116,550)

Explanation: Dealculation of operating Expenses salaries Rent Utilities Insurance operating Expense Amount (3) $92,900 $ 15,500 $ 1,275 $2,450 $112,125

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