in the course of your examination of the books and records of Andelin Company fo

Question

in the course of your examination of the books and records of Andelin Company for the ending December 31, 2012, you find the following data: cost of goods sold $550,000 salaries earned by employees 95,000 rent paid 50,000 salaries payed to employees 110,000 total sales revenue 945,000 cash paid for advertising 4,000 cash paid for inventory purchases 600,000 interest expense incurred 3,000 advertising expense 5,000 tax assessment for the year 10,000 interest paid 4,500 rent expense 45,000 Using accrual-basis accounting please list the revenues and expenses that are relevant and compute Andelin Copany's net income for 2012.

Explanation / Answer

Particulars Amount Sales Revenue 945000 Less: Cost of goods sold 550000 Gross Profit 395000 Salaries 95000 Rent expense 45000 Interest Expense 3000 Advertising expense 5000 Tax expense 10000 Net Income 237000

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