State College Technology Store (SCTS) is a retail computer store in the universi

Question

State College Technology Store (SCTS) is a retail computer store in the university center of a large mid-western university. SCTS engaged in the following transactions during November of the current year: Nov. 1 Purchased 20 Nopxe laptop computers on account from Led Inc. The laptop computers cost $800 each, for a total of $16,000. Payment is due in 30 days. Nov. 6 Sold four Nopxe laptop computers on account to the Department of Microbiology at State College at a retail sales price of $1,200 each, for a total of $4,800. Payment is due in 30 days. Dec. 1 Paid the $16,000 account payable to Led Inc. Dec. 6 Collected the $4,800 account receivable from State College's Department of Microbiology. Assume that the other expenses incurred by SCTS during November and December were $1,000, and assume that all of these expenses were paid in cash. SCTS is not subject to income tax because it is a wholly-owned unit of a nonprofit organization.

Explanation / Answer

Net Income = $ 4,800 - $ 16,000 - $ 1,000 = - $ 12,200

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