Question

Alpha Company provided the following data concerning its income statement: sales, $920,000; purchases, $359,000; beginning inventory, $240,000; ending inventory, $277,000; operating expenses, $111,000; freight-in, $5,000; sales discounts, $19,000; purchases discounts, $15,000; sales returns & allowances, $122,000; and purchases returns & allowances, $41,000. The data are complete and provide the basis for preparation of an income statement. How much is net income?

Answer 1

Net Sales revenue:
Sales revenue				920000
Lless: Sales return and allowance				122000
Less: Sales discount				19000
Net Sales revenue:				779000
Net cost of goods sold
Beginning Inventory				240000
Add: Net Purchase
Purchase Gross			359000
Add: Frieght in			5000
Less: Purchase returns			-41000
Less: Purchase discount			-15000
Net Purchase				308000
Total cost of goods available				548000
Less: Ending inventory				-277000
Cost of goods sold				271000
Net income:
Net sales revenue			779000
Less: Cost of goods sold			271000
Ggross margin			508000
Less: Operating expenses			111000
Net income:			397000