Answer:
a. $1,350,000
b. $200,000
Explanation:
a. Selma's accrual basis gross receipts for 2020
= cash receipts + accounts receivables - cash collected from 2019 sales - bank loan
= $1,400,000 + $250,000 - $200,000 -
$100,000
= $1,350,000
b. Selma's gross income from merchandise sales 2020.
We need to calculate first the cost of goods sold during 2020.
The cost of goods sold during 2020
= Total purchase made during 2020 + ending inventory 2019 - ending inventory 2020
= $1,300,000 + $150,000 - $300,000
= $1,150,000
The Gross profit for 2020
= Gross receipts - Cost of goods sold
= $1,350,000 - $1,150,000
= $200,000
