Question

During the year ended December 31, 2021, Kelly's Camera Shop had sales revenue of ( $ 130,000 ), of which ( $ 65,000) was on credit. At the start of 2021, Accounts Receivable showed a ( $ 10,000 ) balance. Kelly's Camera Shop collected ( $ 50,000 ) from customers during the year. In addition, the company determined that it needed to make an allowance for doubtful accounts of ( $ 2,000 ) based on the credit sales.

Answer 1

The accounting profit is $50,000.

Step-by-step explanation:

The subject of this question is Business and the grade level is High School. The question is asking for the accounting profit of a firm based on its sales revenue and expenses. To calculate the accounting profit, we need to subtract the total expenses from the sales revenue. In this case, the firm's sales revenue is $1 million, and the total expenses are $950,000 ($600,000 on labor + $150,000 on capital + $200,000 on materials). Therefore, the firm's accounting profit is $50,000.