Question

Below is last month's business income statement for Korey's Comics. Using the information provided in the statement, determine both the gross profit and net income for Korey's Comics last month.

Korey?s Comics

Monthly Business Income Statement

Revenue
Sales:
$5,670

Returns:
$185

Net Sales:

Cost of Goods Sold
Beginning Inventory:
$625

Purchases:
$1,460

Goods Available for Sale:

Ending Inventory:
$665

Total Cost of Goods Sold:


GROSS PROFIT:

Operating Expenses
Wages:
$1,230

Rent:
$650

Utilities:
$185

Advertising:
$90

Taxes:
$125

Total Operating Expenses:


NET INCOME:
a.
$4,065; $1,785
b.
$5,485; $1,785
c.
$4,065; $2,280
d.
$5,485; $2,280

Answer 1

Net Sales = $5,670 − $185 = $5,485
COGS = (Beginning $625 + Purchases $1,460) − Ending $665 = $2,085 − $665 = $1,420
Gross Profit = $5,485 − $1,420 = $4,065

Total Operating Expenses = $1,230 + $650 + $185 + $90 + $125 = $2,280
Net Income = $4,065 − $2,280 = $1,785

Answer: a. $4,065; $1,785