On January 1, 2011, Rachael Ray Corporation had merchandise inventory of $50,000. At December 31, 2011, Rachael Ray had the following account balances.
|
Freight in |
$ 4,000 |
|
Purchases |
500,000 |
|
Purchase discounts |
6,000 |
|
Purchase returns and allowances |
2,000 |
|
Sales |
800,000 |
|
Sales discounts |
5,000 |
|
Sales returns and allowances |
10,000 |
At December 31, 2011, Rachael Ray determines that its ending inventory is $60,000.
Instructions
(a) Compute Rachael Ray’s 2011 gross profit.
(b) Compute Rachael Ray’s 2011 operating expenses if net income is $130,000 and there are no nonoperating activities.