
Concept Introduction:
Net Sales:
The net sales can be defined as sales after subtracting sales discounts and sales returns and allowances. The net sales are the sales which actually took place. The net sales are calculated as −
To compute:
The Company's net sales
Concept Introduction:
Total cost of Merchandise:
Cost of merchandise can be defined as the total cost incurred to purchase the goods. The cost of merchandise is calculated after subtracting purchase discounts received and purchases returns and allowances from Invoice cost of merchandise purchase and adding cost of transportation to it.
To Compute:
The Company's total cost of merchandise
The Company's total cost of merchandise = $ 134,600
The Company's total cost of merchandise is calculated as under −
Given,
- Invoice cost of merchandise purchase = $ 138,500
- Purchase Discounts received = $ 2,950
- Purchase returns and allowances = $6,700
- Cost of transportation-in = $ 5,750
Concept Introduction:
Income Statement:
The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business. It can be single step income statement as well multi step income statement.
To prepare:
Multi step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses
Barkley Company | ||
Income Statement | ||
For the year Ended March 31, 201X | ||
Sales | 332,650 | |
Less: | ||
Sales Discounts | 5,875 | |
Sales returns and allowances | 20,000 | 25,875 |
Net Sales | 306,775 | |
Less: Cost of goods sold | 115,600 | |
Gross profit | 191,175 | |
Expenses | ||
Selling expenses | ||
Sales Salaries Expenses | 44,500 | |
Rent expense - Selling space | 16,000 | |
Store supplies expenses | 3,850 | |
Advertising Expense | 26,000 | |
Total selling expenses | 90,350 | |
General and administrative expenses | ||
Office salaries expense | 40,750 | |
Rent expense - Office space | 3,800 | |
Office Supplies Expense | 1,100 | |
Total general and administrative expenses | 45,650 | |
Total Expenses | 136,000 | |
Net Income | 55,175 |
The above income statement is prepared as under −
Given,
- Sales = $ 332,650
- Sales discounts = $ 5,875
- Sales returns and allowances = $ 20,000
- Cost of goods sold = $ 115,600
- Sales Salaries Expenses = $ 44,500
- Rent expense - Selling space = $ 16,000
- Store supplies expenses = $ 3,850
- Advertising Expense = $ 26,000
- Office salaries expense = $ 40,750
- Rent expense - Office space = $ 3,800
- Office Supplies Expense = $ 1,100
Income Statement:
The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business. It can be single step income statement as well multi step income statement.
To prepare:
Single-step Income statement that includes categories like net sales, cost of goods sold, selling expenses, and general and administrative expenses
Barkley Company | ||
Income Statement | ||
For the year Ended March 31, 201X | ||
Net Sales | 306,775 | |
Less: | ||
Expenses | ||
Cost of goods sold | 115,600 | |
Total selling expenses | 90,350 | |
Total general and administrative expenses | 45,650 | |
Total expenses | 251,600 | |
Net Income | 55,175 |
The single step income statement is prepared as under −
Given,
- Sales = $ 332,650
- Sales discounts = $ 5,875
- Sales returns and allowances = $ 20,000
- Cost of goods sold = $ 115,600
- Sales Salaries Expenses = $ 44,500
- Rent expense - Selling space = $ 16,000
- Store supplies expenses = $ 3,850
- Advertising Expense = $ 26,000
- Office salaries expense = $ 40,750
- Rent expense - Office space = $ 3,800
- Office Supplies Expense = $ 1,100
The net sales were calculated −
Concept Introduction:
Income Statement:
The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business. It can be single step income statement as well multi step income statement.
To prepare:
Multi step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses
Income Statement:
The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business. It can be single step income statement as well multi step income statement.
To prepare:
Single-step Income statement that includes categories like net sales, cost of goods sold, selling expenses, and general and administrative expenses

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Chapter 5 Solutions
FUND.ACCT.PRIN.(LOOSELEAF)
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