On January 1, 2019, Brooke Hanson Corporation had inventory of $50,000. At December 31, 2019, Brooks Hanson had the following account balances.
| Freight-in | $4,000 |
| Purchases | 509,000 |
| Purchase discounts | 6,000 |
| Purchase returns and allowances | 2,000 |
| Sales Revenue | 840,000 |
| Sales discounts | 5,000 |
| Sales returns and allowances | 10,000 |
At December 31, 2019, Brooke Hanson determines that its ending inventory is $60,000.
Instructions
- Compute Brooke Hanson's 2019 gross profit.
- Compute Brooke Hanson's 2019 operating expenses if net income is $130,000 and there are no non operating activities.
Solution
a.
Brooke Hanson Corporation
Gross Profit
For the Year Ended December 31, 2019
Gross Profit
For the Year Ended December 31, 2019
b.
Operation Expenses = Gross profit - net profit = $380,000 - $130,000 = $250,000