Accounting homework help preparing a single step income statement with the following information.?

Question

The beginning merchandise inventory was 92,000, decreased 20% during the current year.

Sales discounts amount to 17,000

20,000 shares of common stock were outstanding for the current year

The income tax rate is 30%

Cost of goods sold amounts to 500,000

administrative expenses are 20% of COGS but only 8% of gross sales

four fifths of the operating expenses relates to sales activities.

my confusion on this is how do I find the net sales given the above information. If just seems like something is missing. Any serious replies are greatly appreciated.

Answer 1

opening stock= 92000
closing stock = 73600(80% of 92000)

cost of goods sold = opening stock+purchases-closing stock
500000=92000+purchases-73600
therefore purchases= 481600

now,
administrative expenses = 20% of 500000
therefore administrative expenses = 100000

administrative expenses = 8% of gross sales
therefore 100000=.08x
therefore x=1250000
gross sales = 1250000
net sales = 1250000-17000=1233000

income statement as follows
sales(net) 1233000
less purchases (481600)
add closing stock 73600
less opening stock (92000)
--------------
Gross profit 733000
less administrative exp 100000
less operating expenses x
-------------
net profit 633000-x
tax 0.30(633000-x)
------------------

PAT 633000 - x - 189900+.30x
or 443100 - .70x

Answer 2

If selling and admin expenses are 20% of COGSs and 8% of gross sales, then

s&a = $100,000 ($500,000 * 20%) and
gross sales = $1,250,000 (as $100,000 is 8% of $1,250,000)

Net sales = gross sales - discounts given

Answer 3

I'm sorry but I don't know about this

Answer 4

so happy that I found this topic already answered! It's like you've read my thoughts!