Newark Company has provided the following information:• Cash sales, $450,000• Credit sales, $1,350,000• Selling and administrative expenses, $330,000• Sales returns and allowances, $90,000• Gross profit, $1,360,000• Increase in accounts receivable, $55,000• Bad debt expense, $33,000• Sales discounts, $43,000• Net income, $1,030,000How much is Newark's cost of sales? A $307,000. B. $252,000. C. $440,000. D. $340,000.

Question

Business

Griffin Brandt

29 November, 01:52

Newark Company has provided the following information:• Cash sales, $450,000• Credit sales, $1,350,000• Selling and administrative expenses, $330,000• Sales returns and allowances, $90,000• Gross profit, $1,360,000• Increase in accounts receivable, $55,000• Bad debt expense, $33,000• Sales discounts, $43,000• Net income, $1,030,000How much is Newark's cost of sales? A $307,000. B. $252,000. C. $440,000. D. $340,000.

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Answers (1)

Know the Answer?

Luis Mclaughlin · Answer 1

Newark's cost of sales is A $307,000

Explanation:

Cost of Sales can be determined by using the Missing figure Approach for this question.

Cost of Sales = Sales less Gross Profit

Calculation of Sales figure:

Cash sales, $450,000

Credit sales, $1,350,000

Less Sales returns and allowances, ($90,000)

Less Sales Discounts ($43,000)

Sales $1,667,000

Calculation of Cost of Sales

Thus Cost of Sales = $1,667,000 - $1,360,000 (given)

= $307,000