The gross margin for the year 2012= Sales - cost of sales
Margin= $7250-$3000= $4250
1) Started the business by issuing common stock for $7,500 cash
2) Paid cash to purchase $5,000 of inventory
3) Sold inventory that cost $3,000 for $7,250 cash
4) Incurred and paid operating expenses, $250
Margin= $7250-$3000= $4250
Step 1: Calculate the Cost of Goods Sold (COGS)
Since the perpetual inventory system is used, we can calculate the COGS for the inventory sold in transaction 3. The COGS is the cost of the inventory that was sold.
COGS = Cost of inventory sold
= $3,000 (given in transaction 3)
Step 2: Calculate the Gross Profit
The gross profit is the difference between the revenue generated from the sale of inventory and the COGS.
Gross Profit = Revenue - COGS
Revenue = Selling price of the inventory sold
= $7,250 (given in transaction 3)
Gross Profit = $7,250 - $3,000
= $4,250
Step 3: Calculate the Operating Expenses
The operating expenses include any costs incurred for running the business. In this case, the amount is given as $250 (transaction 4).
Step 4: Calculate Net Income
Net Income is the final profit amount after subtracting all expenses from the gross profit.
Net Income = Gross Profit - Operating Expenses
Net Income = $4,250 - $250
= $4,000
Therefore, the net income for Schumacher Company in 2012 is $4,000.