(L.O. 1) Which of the following formulas will yield the net income figure for a merchandising firm?
Approach and Explanation: Before you look at the alternative answers, write down the components in the net income computation. Abbreviations for these components will suffice.
|=||Income from Operations|
Then take each answer selection and see if it describes your model. (Solution = c.)
(L.O. 2) The following amounts relate to the current year for the Ira Company:
|Beginning inventory||$ 20,000|
The amount of cost of goods sold for the period is:
Approach and Explanation: Write down the components of the cost of goods sold. Enter the amounts given and solve for the unknown.
Solving for Cost of Goods Sold: $181,200 - $28,000 = X; X = $153,200 (Solution = c.)
TIP: Freight-out is classified as a selling expense, not a component of cost of goods sold.
(L.O. 1, 2) The following amounts relate ...