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Powell company began the year 3 accounting period with $40,000 cash, $86,000 inventory, $60,000 common stock, and $66,000 retained earnings. During year 3, powell experienced the following events: sold merchandise costing $58,000 for $99,500 on account to prentise furniture store. Delivered the goods to prentise under terms fob destination. Freight costs were $900 cash. Received returned goods from prentise. The goods cost powell $4,000 and were sold to prentise for $5,900. Granted prentise a $3,000 allowance for damaged goods that prentise agreed to keep. Collected partial payment of $81,000 cash from accounts receivable.

Sagot :

From the income statement that's computed, the value of the net income will be $35700.

How to compute income statement

The complete question is to compute the income statement. This goes thus:

Gross sales $99500

Less: Sales return = $8900

Net sales = $90600

Less: Cost of good sold = $54000

Less: Freight out = $900

Net income = $35700

In conclusion, the net income is $35700.

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