The following accounts and their current balances appear in the ledger of Cerelat Co. at the end of its fiscal year, June 30. Cerelat uses a periodic inventory system.

-A physical inventory at the end of June was $882,000. Estimated Returns Inventory is expected to increase to $16,500. What is Cerelat Co.'s income from operations for the year?

Question

The following accounts and their current balances appear in the ledger of Cerelat Co. at the end of its fiscal year, June 30. Cerelat uses a periodic inventory system.
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-A physical inventory at the end of June was $882,000. Estimated Returns Inventory is expected to increase to $16,500. What is Cerelat Co.'s income from operations for the year?

Quizplus · Accepted Answer

Sales - Cost of goods sold = Gross profit; Gross profit - Selling expenses - Administrative expenses = Operating income
 
$1,600,000 - $822,000 = $778,000 - $380,000 - $262,000 = $136,000

The Following Accounts and Their Current Balances Appear in the Ledger