Question

Part 2 of 4 On October 1, the Business Students' Society (BSS) placed an order for 150 golf shirts at a unit cost of $16, under terms 2/10. The order was received on October 10, but 30 golf shirts had been damaged in shipment. On October 11, the damaged golf shirts were returned. On October 12, BSS complained that the remaining golf shirts were slightly defective so the supplier granted a GL $120 allowance. 5. BSS paid for the golf shirts on October 13. During the first week of October, BSS received student and faculty orders for 120 golf shirts, at a unit price of $33.50, on terms 2/10, n/30. 7. The golf shirts were delivered to these customers on October 18. Unfortunately, customers were unhappy with the golf shirts, so BSS permitted them to be returned or gave an allowance of $8.50 per shirt. 8. On October 21, one-half of the golf shirts were returned. 9. On October 22, the remaining 60 customers were granted the allowance on account 10. The customers paid their remaining balances during the week of October 25. 0.75 points eBook Print Report the financial effects of the above transactions in a multistep income statement 2. for the month ended October 31 prepared for internal use. Assume operating expenses, other than cost of goods sold, are $120 and income tax expense is $150. References BUSINESS STUDENTS' SOCIETY Income Statement For the Month Ended October 31

Answer 1

Answer:

2.)

BUSINESS STUDENT'S SOCIETY Income statement For the month ended October 31
Revenues :-
Sales [ 120 golf shirts * $33.50 ]	$4,020
Sales returns and allowances [ [ 60 customers * $33.50 ] + [ 60 * $8.50 ] ]	$2,520
Sales discounts [ [ $4,020 - $2,520 ] * 2% ]	$30
Net sales revenue [ $4,020 - $2,520 - $30 ]	$1,470
Cost of goods sold	$882
Gross profit [ $1,470 - $882 ]	$588
Operating expenses	$120
Income from operations [ $588 - $120 ]	$468
Other income	$0
Income before income tax [ $0 -$468 ]	$468
Income tax expense	$150
Net income [ $468 - $150 ]	$318

Working notes :-

Cost of goods sold ':-
Accounts payable	= { [ [ 150 * $16 ] - [ 30 * $16 ] - $120 ]   = $2,400 - $480 - $120 = $1,800
Purchase discount	= $1,800 * 2% = $36
Cash	= $1,800 - $36 = $1,764
Cost of goods sold	= $1,764 - [ $1,764 * 2 ] = $1,764 - $882 = $882