Presented below is financial information for two different companies. Compute the missing amounts. Whispering Company Metlock Company Sales revenue 88,880 (d) Sales returns and allowances (a) 4,820 Net sales 83,220 91,610 Cost of goods sold 53,820 (e) Gross profit (b) 40,630 Operating expenses 14,400 20,740 Net income (c) 19,890

See explanation section.

Explanation:

Particulars                            Whispering Company                        Metlock Company

Sales revenue                              $88,880                                      $96,430 (D)  

Sales returns and allowances    $5,660 (Note - A)                        $4,820

Net sales                                      $83,220                                       $91,610

Cost of goods sold                      $53,820                                       $50,980 (E)

Gross profit                                   $29,400 (B)                                 $40,630

Operating expenses                    $14,400                                        $20,740

Net income                                   $15,000 (C)                                   $19,890

Note A: Sales revenue - Sales returns and allowances = Net sales

Sales returns and allowances =  $88,880 - $83,220

Sales returns and allowances = $5,660

Note B: Net sales - Cost of goods sold = Gross profit

$83,220 - $53,820 = Gross profit

Gross profit = $29,400

Note C: Net income = Gross profit - Operating expenses

Net income = $29,400 - $14,400

Net income = $15,000.

Note D: Sales revenue - Sales returns and allowances = Net sales

Sales revenue = Net sales + Sales returns and allowances

Sales revenue = $91,610 + $4,820

Sales revenue = $96,430

Note E: Net sales - Cost of goods sold = Gross profit

or, - Cost of goods sold = Gross profit - Net sales

or, Cost of goods sold = Net sales - Gross profit [multiplying both sides by -1]

Cost of goods sold = $91,610 - $40,630

Cost of goods sold = $50,980

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