Question

Assume that you are the owner of Campus Connection, which specializes in items that interest students. At the end of January of the current year, you find (for January only) this information:
a. Sales, per the cash register tapes, of $112,000, plus one sale on credit (a special situation) of $3,100.

b. With the help of a friend (who majored in accounting), you determine that all of the goods sold during January cost $48,000 to purchase.

c. During the month, according to the checkbook, you paid $42,000 for salaries, rent, supplies, advertising, and other expenses; however, you have not yet paid the $1,000 monthly utilities for January on the store and fixtures.

Required:

On the basis of the data given (disregard income taxes), what was the amount of net income for January?. (Hint: A convenient form to use has the following major side captions: Revenue from Sales, Expenses, and the difference—Net Income.)

Answer 1

Answer:

The amount of net income for January was $24,100

Explanation:

Revenues from sales $115,100 (for this analysis is not important if the sales were in cash or on credit)

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Cost of goods sold $48,000

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Gross profit $67,100

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Salaries, rent, supplies, advertising, other expenses and monthly utilities (it is not important for this analysis if all the exenses were paid) -$43,000

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Net income $24,100