Question

Fill in the missing amounts.

Monty Corp.
Whispering Winds Corp.
Sales revenue
$90,000 $enter a dollar amount
Sales returns and allowances
enter a dollar amount 5,000
Net sales
84,000 106,000
Cost of goods sold
53,760 enter a dollar amount
Gross profit
enter a subtotal of the two previous amounts 40,280
Operating expenses
15,120 enter a dollar amount
Net income
enter a total net income

Answer 1

Let understand that the organized table are intended to calculate missing numbers on Income Statement for the two companies are drawn below.

• Here, we are calculating missing columns for Monty Corp. and Whispering Winds Corp.

• Also understand that the bold numbers are the columns calculated according to the question.

Particulars                             Monty Corp.    Whispering Winds Corp.

Sales revenue                         $90,000                $111,000

Sales return and allowance   $6,000                   $5,000

Net sales                                 $84,000                 $106,000

Cost of goods sold                 $53,760                $65,720  

Gross profit                             $30,240                 $40,280

Operating expenses               $15,120                 $19,080

Net income                              $15,120                 $21,200

In conclusion, the formulae used to derived the bolded answers are:

• Sales revenue - Net sales = Sales returns and allowance
• Net sales - Cost of goods sold = Gross profit
• Gross profit - Operating expenses = Net income
• Net sales + Sales return and allowance = Sales revenue
• Net sales - Gross profit = Cost of goods sold
• Gross profit - Net income = Operating expenses

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