The Following Data Relate to Rocket Company for the Year

question 115

Multiple Choice

The following data relate to Rocket Company for the year ended December 31,2012.Rocket Company uses the cash basis. $\begin{array}{llcc} \text {Sales on credit } &\$180,000 \\ \text {Cost of inventory sold on credit } &130,000\\ \text { Collections from customers } &1700,000\\ \text { Purchase of inventory on credit } &140,000\\ \text { Payment for purchases } &150,000\\ \text { Selling expenses (accrual basis) } &20,000\\ \text { Payment for selling expenses } &25,0000\end{array}$
Which of the following amounts represents income for Rocket Company for the year ended December 31,2012?

• A)$30,000
• B)$5,000 loss
• C)$40,000
• D)$45,000
• E)$50,000

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Definitions:

Critical Thinking

The intellectual discipline of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and evaluating information gathered from observation, experience, reflection, reasoning, or communication.

Rush Hour Traffic

The significantly increased flow of vehicle traffic typically occurring during the beginning and end of the workday.

Parking

The act of stopping and disengaging a vehicle in a designated place or area.

Holistic Critical Thinking

Involves analyzing and evaluating a situation or argument considering all its interconnected and complex components.