Answer:
See explanation section.
Explanation:
Particulars Whispering Company Metlock Company
Sales revenue $88,880 $96,430 (D)
Sales returns and allowances $5,660 (Note - A) $4,820
Net sales $83,220 $91,610
Cost of goods sold $53,820 $50,980 (E)
Gross profit $29,400 (B) $40,630
Operating expenses $14,400 $20,740
Net income $15,000 (C) $19,890
Note A: Sales revenue - Sales returns and allowances = Net sales
Sales returns and allowances = $88,880 - $83,220
Sales returns and allowances = $5,660
Note B: Net sales - Cost of goods sold = Gross profit
$83,220 - $53,820 = Gross profit
Gross profit = $29,400
Note C: Net income = Gross profit - Operating expenses
Net income = $29,400 - $14,400
Net income = $15,000.
Note D: Sales revenue - Sales returns and allowances = Net sales
Sales revenue = Net sales + Sales returns and allowances
Sales revenue = $91,610 + $4,820
Sales revenue = $96,430
Note E: Net sales - Cost of goods sold = Gross profit
or, - Cost of goods sold = Gross profit - Net sales
or, Cost of goods sold = Net sales - Gross profit [multiplying both sides by -1]
Cost of goods sold = $91,610 - $40,630
Cost of goods sold = $50,980
