Sales returns, discounts, gain, and a multistep income statement
The following information was drawn from the 2011 accounting records of Goldstein Merchandisers.
1. Inventory that had cost $22,400 was sold for $34,000 under terms 2/20, net/30.
2. Customers returned merchandise to Goldstein. The merchandise had been sold for a price of $1,400. The merchandise had cost Goldstein $840.
3. All customers paid their accounts within the discount period.
4. Selling and administrative expenses amounted to $5,600.
5. Interest expense amounted to $350.
6. Land that had cost $8,000 was sold for $9,500 cash.
Required
a. Determine the amount of net sales.
b. Prepare a multistep income statement.
c. Where would the interest expense be shown on the statement of cash flows?
d. How would the sale of the land be shown on the statement of cash flows?
e. Explain the difference between a gain and revenue.
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