## Merchandising – Computing income statement amounts

**Merchandising: Computing income statement amounts**

In this exercise you are being asked to compute Net Sales (Net Revenues), Gross Profit, and Net Income. Below are the formulas and the computations of each of the required elements.

Net Sales | = | Sales – Discounts – Returns and Allowances. | |||
---|---|---|---|---|---|

= | $127,900 – $3,900 – $2,900 | ||||

= | $121,100 | ||||

= | Net Sales – Cost of Goods Sold. | ||||

= | $121,100 – $55,500 | ||||

= | $65,600 |

Net income = Gross profit – Operating expenses

In order to find Net Income, we first must determine Total Operating Expenses.

= | Selling Expenses + General and Administrative Expenses. | |||

= | $8,800 + $8,600 | |||

= | $17,400 | |||

Thus, Net Income | = | Gross Profit – Total Operating Expenses. | ||
---|---|---|---|---|

= | $65,600 – $17,400 | |||

= | $48,200 |

Therefore, the final answer is:

**Click following link to download this document**

Merchandising - Computing income statement amounts.docx