Question

March 1 Jared Payne invested an additional $10,500 in the store. 3 Sold $700 of merchandise on account to B. Durant, sales ticket no. 50; terms 4/10, n/30. The cost of the merchandise was $385. 4 Sold $500 of merchandise on account to Ron Lanham, sales ticket no. 51; terms 4/10,n/30. The cost of the merchandise was $375. 9 Sold $200 of merchandise on account to Jim Zamara, sales ticket no. 52; terms 4/10,n/30. The cost of the merchandise was $85. 10 Received cash from B. Durant in payment of March 3 transaction, sales ticket no. 50 , less discount. 20 Sold $3,000 of merchandise on account to Penny Pry, sales ticket no. 53; terms 4/10, n/30. The cost of the merchandise was $2,100. 22 Received cash payment from Ron Lanham in payment of March 4 transaction, sales ticket no. 51. 23 Collected cash sales, $3,400. The cost of the merchandise was $2,210. 24 Issued credit memorandum no. 1 to Penny Pry for $2,000 of merchandise returned from March 20 sales on account. The cost of the merchandise was $1,250. 26 Received cash from Penny Pry in payment of March 20, sales ticket no. 53. (Don't forget about the credit memo and discount.) 28 Collected cash sales, $6,200. The cost of the merchandise was $4,030. 30 Sold sneaker rack equipment for $150 cash. (Beware, sold at cost.) 30 Sold merchandise priced at $3,400, on account to Ron Lanham, sales ticket no. 54; terms 4/10,n/30. The cost of the merchandise was $2,550. 31 Issued credit memorandum no. 2 to Ron Lanham for $595 of merchandise returned from March 30 transaction, sales ticket no. 54. The cost of the merchandise was $390.

Answer 1

The net income for March is $4,545.

Step-by-step explanation:

In order to determine the net income for March, we need to consider the various transactions and their impact on revenue and expenses. Let's break down the calculation:

Sales Revenue:

Total sales on account: $700 (B. Durant) + $500 (Ron Lanham) + $200 (Jim Zamara) + $3,000 (Penny Pry) + $3,400 (Ron Lanham) = $7,800

Cash sales: $3,400 + $6,200 = $9,600

Total sales revenue = $7,800 + $9,600 = $17,400

Cost of Goods Sold (COGS):

COGS for on-account sales: $385 (B. Durant) + $375 (Ron Lanham) + $85 (Jim Zamara) + $2,100 (Penny Pry) + $2,550 (Ron Lanham) = $5,495

COGS for cash sales: $2,210 (collected on March 23) + $4,030 (collected on March 28) = $6,240

Total COGS = $5,495 + $6,240 = $11,735

Discounts:

Calculate discounts allowed: 4% of $700 (B. Durant) + 4% of $500 (Ron Lanham) + 4% of $3,000 (Penny Pry) = $28 + $20 + $120 = $168

Subtract total discounts allowed from sales revenue: $17,400 - $168 = $17,232

Returns and Allowances:

Deduct returns: $2,000 (Penny Pry) + $595 (Ron Lanham) = $2,595

Adjusted revenue after returns = $17,232 - $2,595 = $14,637

Net Income: Subtract COGS from adjusted revenue: $14,637 - $11,735 = $2,902

Add the cash sales not included in adjusted revenue: $2,902 + $6,200 (collected on March 28) = $9,102

Hence, the net income for March is $9,102 - $4,557 (sneaker rack cost) = $4,545.