Tri Fecta, a partnership, had revenues of $361,000 in its first year of operatio

ID: 2330586 • Letter: T

Question

Tri Fecta, a partnership, had revenues of $361,000 in its first year of operations. The partnership has not collected on $46,800 of its sales and still owes $38,300 on $185,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $26,200 in salaries. The partners invested $42,000 in the business and $22,000 was borrowed on a five-year note. The partnership paid $2,200 in interest that was the amount owed for the year and paid $9,500 for a two-year insurance policy on the first day of business. Compute net income for the first year for Tri Fecta.

Explanation / Answer

Tri Fecta

Income statement

Insurance premium paid for a 2 year policy = $9,500

Hence, annual insurance expense = 9,500/2

= $4,750

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Revenues 361,000 Less : cost of materials purchased -185,000 Gross profit 176,000 Less:Salaries -26,200 Interest -2,200 Insurance -4,750 Net income 142,850

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Tri Fecta, a partnership, had revenues of $360,000 in its first year of operatio

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Tri Fecta, a partnership, had revenues of $361,000 in its first year of operatio

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