Question

Sales revenue equals $367,810, sales returns & allowances are $10,000, and sales discounts total $14,180. The cost of goods sold is $216,490, operating expenses are $28,500, and the company incurs $31,640 of income tax expense. Which of the following statements is correct?a. Net sales equal $367,810 and gross profit is $67,000.b. Net sales equal $343,630 and gross profit is $98,640.c. Net sales equal $343,630 and gross profit is $127,140.d. Net sales equal $67,000 and gross profit is $98,640.

Answer 1

Answer:

The correct option is C,net sales equal $343,630 and gross profit is $127,140

Explanation:

The net sales is the sales revenue minus sales returns and allowances as well as sales discount,hence net sales is computed thus:

Sales revenue                                              $367,810

Sales returns and allowances                     ($10,000)

Sales discounts                                            ($14,180)

Net sales                                                       $343,630

The gross profit is net sales of $343,630 less costs of goods sold of $216,490

Net sales                                $343.630

Cost of goods sold               ($216,490)

Gross profit                            $127,140

Hence option C is the correct answer