BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Income statement and accounts for merchandiser

For the fiscal year, sales were $191,350,000 and the cost of merchandise sold was $114,800,000.

  1. a. What was the amount of gross profit?
  2. b. If total operating expenses were $18,250,000, could you determine net income?
  3. c. Is Customer Refunds Payable an asset, liability, or owner’s equity account, and what is its normal balance?
  4. d. Is Estimated Returns Inventory an asset, liability, of owner’s equity account, and what is its normal balance?

(a)

To determine

The income statement: This is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned and expenses incurred by the company over a specific period of time. An income statement is also known as an operations statement, an earnings statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

To Calculate: The amount of gross profit.

Explanation

Gross profit represents the revenue after the deduction of cost of goods sold from the net sales of a business. Its mathematical representation is as below:

Gross profit=SalesCost of merchandise sold

Calculate the amount of gross profit.

Sales = $191,350,000

Cost of merchandise sold = $114,800,000

Gross profi

(b)

To determine

To Explain: Whether net income can be calculated by the help of operating expenses.

(c)

To determine

To Describe: The head and normal balance of customer refunds payable account.

(d)

To determine

To Describe: The head and normal balance of estimated returns inventory account.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Which one is best?

Foundations of Business (MindTap Course List)

Explain how absolute advantage and comparative advantage differ.

Brief Principles of Macroeconomics (MindTap Course List)

Give three examples of important trade-offs that you face in your life.

Principles of Microeconomics (MindTap Course List)

AMORTIZATION SCHEDULE WITH A BALLOON PAYMENT You want to buy a house that costs 100,000. You have 10,000 for a ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Journalize the adjustments for Newkirk Company as of August 31.

College Accounting (Book Only): A Career Approach