Question

Wisconsin Company uses the periodic inventory system. Sales for 2016 were $1,880,000 while operating expenses were $700,000. Beginning and ending inventories for 2016 were $280,000 and $240,000, respectively. Net purchases were $720,000 while freight in was $60,000. The net income or loss for 2016 was: Group of answer choices $120,000 net income $ 40,000 net income $360,000 net income $120,000 net loss

Answer 1

We will have to calculate the cost of goods sold in order to determine the net income or loss
Cost of goods sold	Beginning inventory + Purchases - Ending inventory
Cost of goods sold	280000+(720000+60000)-240000
Cost of goods sold	280000+780000-240000
Cost of goods sold	$820,000
Calculation of net income or loss is shown below
Sales	$1,880,000
Less: Cost of goods sold	$820,000
Gross profit	$1,060,000
Less: Operating expenses	$700,000
Net income	$360,000
Thus, net income for 2016 is $360,000.