Garnett co. shipped inventory on consignment to hart co. that originally cost $50,000. hart paid $1,200 for advertising that was reimbursable from garnett. at the end of the year, 40% of the inventory was sold for $32,000. the agreement stated that a commission of 10% will be provided to hart for all sales. what amount should garnett report as net income for the year?

The answer is: Garnett Co.'s net income is $7,600

Explanation:

To determine the net income we must first calculate the cost of goods sold and the commissions paid:

Now we can elaborate the following income statement for Garnett Co.

Total sales                     $32,000

COGS                             ($20,000)

Commissions                 ($3,200)

Advertising expense     ($1,200)    

Net income                    $7,600

b. condominum i think

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