Answer:
Charismatic Cat's Income Statement for the recent year:
Sales $1,060,000
Less Cost of Sales: $662,200
Gross Profit = $397,800
Less Selling & Administration - $114,700
Net Income - $283,100
Explanation:
a) cost of goods sold includes opening inventory plus purchases, including freight-in, less closing inventory:
Beginning Inventory - $19,800
Purchases - $636,000
Freight-in - $19,500
Less Closing Inventory - $13,100
b) Selling and Administration expenses include the cost of website maintenance, cost of shipping and wrapping boxes, and marketing.
c) Cost of goods sold is deducted from the sales to arrive at the gross profit, which compares the sales income with the sales cost.
d) Net income is a sum of gross profit less all the marketing, selling, and administration expenses incurred in running the business. This figure represents the gain made from being in business.
Administration - Website maintenance - $53,000
Selling Expenses - $61,700 (marketing - $33,200 + Wrapping box & shipping- $28,500)
