O'Reilly logo

Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

EXERCISE 5-1

Purpose: (L.O. 1) This exercise will help you to identify the relationships among the components involved in measuring net income for a merchandising company.

The following information applies to The Sports Shop for 2014:

Sales $748,000
Sales returns 10,000
Sales discounts 7,000
Cost of goods sold 388,000
Sales commissions expense 107,700
Advertising expense 16,800
Executive salaries expense 100,000
Utilities expense 25,000
Insurance expense 6,000
Freight-out 8,000
Interest revenue 5,500
Interest expense 7,200

Instructions

(a) Compute net sales for 2014.

(b) Compute gross profit for 2014.

(c) Compute total operating expenses for 2014.

(d) Compute net income for 2014.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required