Question

Newark Company has provided the following information:• Cash sales, $450,000• Credit sales, $1,350,000• Selling and administrative expenses, $330,000• Sales returns and allowances, $90,000• Gross profit, $1,360,000• Increase in accounts receivable, $55,000• Bad debt expense, $33,000• Sales discounts, $43,000• Net income, $1,030,000How much is Newark's cost of sales?A $307,000.B. $252,000.C. $440,000.D. $340,000.

Answer 1

Answer:

Newark's cost of sales is A $307,000

Explanation:

Cost of Sales can be determined by using the Missing figure Approach for this question.

Cost of Sales = Sales less Gross Profit

Calculation of Sales figure :

Cash sales,                                          $450,000

Credit sales,                                      $1,350,000        

Less Sales returns and allowances,  ($90,000)

Less Sales Discounts                          ($43,000)

Sales                                                   $1,667,000

Calculation of Cost of Sales

Thus Cost of Sales =  $1,667,000 - $1,360,000 (given)

                               =  $307,000