James Company experienced the following events during its accounting period: (1)Purchased $10,000 of inventory on account.(2)Returned $2,000 of inventory purchased in Event 1.(3)Paid the remaining balance in account payable for the inventory purchased in Event 1.(4)Sold inventory purchased in Event 1 for $10,000 to customers on account. At the end of the first accounting period what would be reported on the Income Statement for net income?

Question

Quizplus · Accepted Answer

The net income is calculated as the sales revenue minus the cost of goods sold. The sales revenue is $10,000, and the cost of goods sold is $8,000 ($10,000 purchase - $2,000 return). Therefore, the net income is $2,000 ($10,000 - $8,000).

James Company Experienced the Following Events During Its Accounting Period