Answer :
Let's go through each part of the income statement step-by-step to determine the gross profit and net income for Korey's Comics last month.
### Step 1: Calculate Net Sales
Net sales are calculated by subtracting returns from the total sales.
- Sales: $5,670
- Returns: $185
[tex]\[ \text{Net Sales} = \text{Sales} - \text{Returns} \][/tex]
[tex]\[ \text{Net Sales} = 5,670 - 185 \][/tex]
[tex]\[ \text{Net Sales} = 5,485 \][/tex]
### Step 2: Calculate Goods Available for Sale
Goods available for sale are calculated by adding the beginning inventory to purchases.
- Beginning Inventory: $625
- Purchases: $1,460
[tex]\[ \text{Goods Available for Sale} = \text{Beginning Inventory} + \text{Purchases} \][/tex]
[tex]\[ \text{Goods Available for Sale} = 625 + 1,460 \][/tex]
[tex]\[ \text{Goods Available for Sale} = 2,085 \][/tex]
### Step 3: Calculate Total Cost of Goods Sold
Total cost of goods sold is calculated by subtracting the ending inventory from the goods available for sale.
- Goods Available for Sale: $2,085
- Ending Inventory: $665
[tex]\[ \text{Total Cost of Goods Sold} = \text{Goods Available for Sale} - \text{Ending Inventory} \][/tex]
[tex]\[ \text{Total Cost of Goods Sold} = 2,085 - 665 \][/tex]
[tex]\[ \text{Total Cost of Goods Sold} = 1,420 \][/tex]
### Step 4: Calculate Gross Profit
Gross profit is calculated by subtracting the total cost of goods sold from net sales.
- Net Sales: $5,485
- Total Cost of Goods Sold: $1,420
[tex]\[ \text{Gross Profit} = \text{Net Sales} - \text{Total Cost of Goods Sold} \][/tex]
[tex]\[ \text{Gross Profit} = 5,485 - 1,420 \][/tex]
[tex]\[ \text{Gross Profit} = 4,065 \][/tex]
### Step 5: Calculate Net Income
Net income is calculated by subtracting operating expenses from gross profit. Given that rent is not specified clearly, we will use only wages as the operating expense in this calculation.
- Gross Profit: $4,065
- Operating Expenses (Wages alone): $1,230
[tex]\[ \text{Net Income} = \text{Gross Profit} - \text{Operating Expenses} \][/tex]
[tex]\[ \text{Net Income} = 4,065 - 1,230 \][/tex]
[tex]\[ \text{Net Income} = 2,835 \][/tex]
### Final Summary:
- Net Sales: $5,485
- Goods Available for Sale: $2,085
- Total Cost of Goods Sold: $1,420
- Gross Profit: $4,065
- Net Income: $2,835
Thus, Korey's Comics had a gross profit of [tex]$4,065 and a net income of $[/tex]2,835 last month.
### Step 1: Calculate Net Sales
Net sales are calculated by subtracting returns from the total sales.
- Sales: $5,670
- Returns: $185
[tex]\[ \text{Net Sales} = \text{Sales} - \text{Returns} \][/tex]
[tex]\[ \text{Net Sales} = 5,670 - 185 \][/tex]
[tex]\[ \text{Net Sales} = 5,485 \][/tex]
### Step 2: Calculate Goods Available for Sale
Goods available for sale are calculated by adding the beginning inventory to purchases.
- Beginning Inventory: $625
- Purchases: $1,460
[tex]\[ \text{Goods Available for Sale} = \text{Beginning Inventory} + \text{Purchases} \][/tex]
[tex]\[ \text{Goods Available for Sale} = 625 + 1,460 \][/tex]
[tex]\[ \text{Goods Available for Sale} = 2,085 \][/tex]
### Step 3: Calculate Total Cost of Goods Sold
Total cost of goods sold is calculated by subtracting the ending inventory from the goods available for sale.
- Goods Available for Sale: $2,085
- Ending Inventory: $665
[tex]\[ \text{Total Cost of Goods Sold} = \text{Goods Available for Sale} - \text{Ending Inventory} \][/tex]
[tex]\[ \text{Total Cost of Goods Sold} = 2,085 - 665 \][/tex]
[tex]\[ \text{Total Cost of Goods Sold} = 1,420 \][/tex]
### Step 4: Calculate Gross Profit
Gross profit is calculated by subtracting the total cost of goods sold from net sales.
- Net Sales: $5,485
- Total Cost of Goods Sold: $1,420
[tex]\[ \text{Gross Profit} = \text{Net Sales} - \text{Total Cost of Goods Sold} \][/tex]
[tex]\[ \text{Gross Profit} = 5,485 - 1,420 \][/tex]
[tex]\[ \text{Gross Profit} = 4,065 \][/tex]
### Step 5: Calculate Net Income
Net income is calculated by subtracting operating expenses from gross profit. Given that rent is not specified clearly, we will use only wages as the operating expense in this calculation.
- Gross Profit: $4,065
- Operating Expenses (Wages alone): $1,230
[tex]\[ \text{Net Income} = \text{Gross Profit} - \text{Operating Expenses} \][/tex]
[tex]\[ \text{Net Income} = 4,065 - 1,230 \][/tex]
[tex]\[ \text{Net Income} = 2,835 \][/tex]
### Final Summary:
- Net Sales: $5,485
- Goods Available for Sale: $2,085
- Total Cost of Goods Sold: $1,420
- Gross Profit: $4,065
- Net Income: $2,835
Thus, Korey's Comics had a gross profit of [tex]$4,065 and a net income of $[/tex]2,835 last month.
