Ask Question
30 March, 07:52

Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory on account. (2) Returned $1,000 of the inventory purchased in Event 1. (3) Paid the remaining balance in accounts payable for the inventory purchased in Event 1. (4) Sold inventory purchased in Event 1 for $5,000 to customers on account. At the end of the first accounting period what would be reported on the Income Statement for net income?

+1
Answers (1)
  1. 30 March, 08:15
    0
    The answer is: $1,000

    Explanation:

    We are given the following events for Amarillo Company:

    Purchased $5,000 inventory Returned $1,000 inventory Paid $4,000 inventory Sold inventory at $5,000

    We can elaborate a simple income statement:

    Sales $5,000

    Cost of goods sold $4,000

    Gross profit $1,000

    Since we don't know any other expenses, we can assume the gross profit equals net income.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory on account. (2) ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers