1. What is the amount of Net Sales that ABC would report on its Income Statement

Question

1. What is the amount of Net Sales that ABC would report on its Income Statement?

$3,000,000

$2,920,000

$3,200,000

$2,970,000

2. What is the amount of Gross Profit that ABC would report on its Income Statement?

$1,300,000

$1,220,000

$1,500,000

$1,270,000

3. What is the TOTAL amount of Operating Expenses that ABC would report on its Income Statement?

$506,000

$500,000

$554,000

$440,000

ABC Company has the following information available on December 31, 2017. The tax rate is 25% $6,000 Sales Salaries $240,000 $16,000 Cash $200,000 Sales Revenue $3,000,000 $60,000 Interest Expense Interest Revenue Administrative Salaries Depreciation (40% selling: 60% administrative Cost of Goods Sold Sales Returns & Allowances Loss on Sale of South American Division Gain on Sale of Equipment $200,000 Dividends Paid $48,000 $1,700,000 ales $30,000 $70,000 $84,000 $50,000 Discounts

Explanation / Answer

Operating expenses are those expenses which are incurred for carrying out the actiivties for which a company is formed.

1) $ 2,920,000 Working: Sales Revenue $       30,00,000 Less: Sales discount $       50,000 Sales Returns and Allownces $       30,000 $             80,000 Net Sales $       29,20,000 2) $1,220,000 Working: Net Sales $       29,20,000 Less:Cost of goods sold            17,00,000 Gross Profit $       12,20,000 3) $500,000 Working: Administrative Salaries $          2,00,000 Depreciation $             60,000 Sales Salaries $          2,40,000 Operating expenses $          5,00,000

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