Questions 4 through 8 are based on the following fact statement:

Complete the following income statement, including cost of goods sold and answer the five multiple-choice questions below. Credit is given for your answers to the multiple-choice questions only. For each question, circle the letter that is the correct answer.

Company X

Income Statement

FYE 12/31/2020

COLUMN 1 COLUMN 2 COLUMN 3

NET SALES REVENUE 4._________

EXPENSES:

COST OF GOODS SOLD

Beginning Merchandise Inventory -0-_

Purchases 5.__________

Less: Purchase Returns &

Allowances 10,000

Less:Purchase Discounts 90,000

Net Purchases 2,000,000

Add: Freight In 200,000

Net Cost of Purchases 6.__________

Cost of Goods Available for Sale 2,200,000

Less: Ending Merchandise Inventory 7._________

Cost of Goods Sold 1,700,000

Gross Profit 1,300,000

Operating Expenses

Total Selling Exxpenses 8.__________

Total Administrative Expenses 300,000

Total Operating Expenses 1,000,000

Operating Income 300,000

ACC122

Exam III

Page 3 of 7

4. What is the answer to blank 4, the amount for net sales revenue?

A. 3,000,000

B. 1,700,000

C. 1,300,000

D. 1,000,000

E. None of the above

5. What is the answer to blank 5, the amount for purchases?

A. 1,900,000

B. 2,000,000

C. 2,100,000

D. 2,200,000

E. None of the above

6. What is the answer to blank 6, the amount for the net cost of purchases?

A. 1,900,000

B. 2,000,000

C. 2,100,000

D. 2,200,000

E. None of the above

ACC122

Exam III

Page 4 of 7

7. What is the answer to blank 7, the amount for ending inventory?

A. 500,000

B. 400,000

C. 300,000

D. 200,000

E. None of the above

8. What is the answer to blank 8, the amount for total selling expenses?

A. 1,000,000

B. 800,000

C. 700,000

D. 300,000

E. None of the above