Question

At the beginning of June, Circuit Country has a balance in inventory of $2,450. The following transactions occur during the month of June.

June		2		Purchase radios on account from Radio World for $2,150, terms 2/15, n/45.
June		4		Pay cash for freight charges related to the June 2 purchase from Radio World, $290.
June		8		Return defective radios to Radio World and receive credit, $300.
June		10		Pay Radio World in full.
June		11		Sell radios to customers on account, $3,900, that had a cost of $2,650.
June		18		Receive payment on account from customers, $2,900.
June		20		Purchase radios on account from Sound Unlimited for $3,250, terms 2/10, n/30.
June		23		Sell radios to customers for cash, $4,750, that had a cost of $3,050.
June		26		Return damaged radios to Sound Unlimited and receive credit of $300.
June		28		Pay Sound Unlimited in full.

2. Prepare the top section of the multiple-step income statement through gross profit for the month of June. (Net Sales, Cost of Goods Sold, and Gross Profit)

Answer 1

Income Statement
Sales Revenue	$                 8,650	=3900+4750
Less Cost of Goods Sold	$                 5,700	=2650+3050
Gross Profit	$                 2,950