Question

You own a store. Beginning inventory on January 1 was $4,000. Ending inventory on December 31 was $4,500. You purchased $22,000 of new merchandise during the year. Sales revenue for the year was $46,000. Selling, general, and administrative (SG&A) costs for the year were $5,000. a) Compute the cost of goods sold (COGS) for the year. 21500 b) Prepare the income statement for the year. Revenue 46000 COGS 21500 Gross Margin 24500 SG&A costs 5000 Profit 19500

Answer 1

Step-by-step explanation:

(a) The computation of the cost of goods sold is shown below:

= Beginning inventory + Purchase of new merchandise - ending inventory

= $4,000 + $22,000 - $4,500

= $21,500

(b) In the income statement, the total revenues and the total expenses are recorded.

If the total revenues are more than the total expenditure then the company earns net income

And, If the total revenues are less than the total expenditure then the company have a net loss

This net income or net loss would reflect in the statement of the retained earning account.

The preparation of the income statement is presented in the spreadsheet. Kindly find the attachment below: