Far East Retailers uses the periodic inventory system to account for its invento
ID: 2426314 • Letter: F
Question
Far East Retailers uses the periodic inventory system to account for its inventory transactions. The following account titles and balances were drawn from Far East’s records for the year 2016: beginning balance in inventory, $46,200; purchases, $352,400; purchase returns and allowances, $14,600; sales, $840,000; sales returns and allowances, $7,520; transportation-in, $2,150; and operating expenses, $65,100. A physical count indicated that $35,100 of merchandise was on hand at the end of the accounting period.
Q. Prepare a multi step income statement
Explanation / Answer
Sales Revenue
Total sale 840000
sales return & allowance 7520
Net Sales Revenue 832480
Less cost of Goods sold
Inventory 46200
+Purchase 352400
+transporation in 2150
-Purchase return & allowance -14600
Cost of Goods sold -386150
Gross Profit 446330
Operating Expense -65100
NET Income 381230
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