Merchandising – Computing income statement amounts

30 Sep No Comments

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
=Net Sales – Cost of Goods Sold.
=$121,100 – $55,500

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
Thus, Net Income=Gross Profit – Total Operating Expenses.
 =$65,600 – $17,400

Therefore, the final answer is: 

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