Question

Using the information below, calculate net income for the period: Sales revenues for the period $ 1,318,000 Operating expenses for the period 253,000 Finished Goods Inventory, January 1 50,000 Finished Goods Inventory, December 31 55,000 Cost of goods manufactured for the period 554,000

Answer 1

Answer:

Net Income                   516,000

Explanation:

Net income = revenue - expenses

sales revenue              1,318,000

COGS                          (549,000) (A)

Operating expenses  (253,000)  

Net Income                   516,000

(A)

To calculate the COGS we will use the inventory identity

$Beginning Inventory + production = Ending Inventory + COGS$

50,000 + 554,000 = 55,000 + COGS

50,000 + 554,000 - 55,000 = COGS

COGS = 549,000