1. Given the following account information, calculate net income: Sales 500,000 Beginning Inventory 200,000...
1. Given the following account information, calculate net income:
| Sales | 500,000 | |
| Beginning Inventory | 200,000 | |
| Ending Inventory | 35,000 | |
| Purchases of Inventory | 25,000 | |
| Selling Expenses | 1,000 | |
| Administrative Expenses | 6,000 | |
| Rent Income | 30,000 | |
| Calculate Net Income |
273,000
333,000
233,000
263,000
2. If the shipping terms are "FOB Destination", then
the buyer is responsible for shipping cost
The seller is responsible for shipping cost
3. If the shipping terms are "FOB shipping point", then
the buyer is responsible for shipping costs
The seller is responsible for shipping costs.
4. When the seller is responsible for paying freight, They will debit _______________ and credit cash
Delivery Expense
Merchandise Inventory
5. When the buyer is responsible for paying freight, They will debit _______________ and credit cash
Delivery Expesne
Merchandise Inventory
Homework Answers
| 1 | Sales | 500000 |
| Less:Cost of goods sold(Note) | 190000 | |
| Gross margin | 310000 | |
| Add:Rent Income | 30000 | |
| Less:Selling expenses | -1000 | |
| Less:Administrative expenses | -6000 | |
| Net Income | 333000 | |
| Note: | ||
| Cost of goods sold =$200,000+25,000-35,000 =$190,000 | ||
| 2 | Under FOB destination the Seller is responsible for Shipping costs | |
| 3 | Under FOB shipping the Buyer is responsible for Shipping costs | |
| 4 | Seller will debit Delivery expenses | |
| 5 | Buyer will debit Merchandise inventory | |
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1. Given the following account information, calculate net
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