Use the Following Financial Information to Find the Entry You

question 97

Multiple Choice

Use the following financial information to find the entry you would make on an income statement for NET INCOME (LOSS) for the year ended December 31, 2011: Gross Sales, $110,000; Sales Returns and Allowances, $8,000; Sales Discounts, $2,400; Merchandise Inventory, January 1, 2011, $50,000; Merchandise Inventory, December 31, 2011, $43,100; Net Purchases, $80,500; Freight In, $975; Salaries, $92,900; Rent, $15,500; Utilities, $1,275; Insurance, $2,450; and Income Tax, $15,650.

• A) $23,458
• B) ($98,544)
• C) $65,782
• D) ($116,550)

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Definitions:

Working Capital Accounts

Accounts related to the short-term financial operations of a business, such as cash, inventory, and accounts payable and receivable.

Accounts Receivable

Funds that customers owe to a company for products or services provided but not yet compensated for.

Inventory Balances

Refers to the total value or quantity of all stock items held by a company at any given time, crucial for managing supply chain and sales.

Accounts Receivable

Accounts receivable is the balance of money due to a firm for goods delivered or services provided but not yet paid for by customers.