Asked by Andres Velazquez on Jul 18, 2024
Verified
A physical inventory at the end of June was $882,000. Estimated Returns Inventory is expected to increase to $16,500. What is Cerelat Co.'s income from operations for the year?
A) $136,000
B) $121,500
C) $105,000
D) $180,000
Income from Operations
The profit generated from a company's regular business operations, excluding any extraordinary items.
Estimated Returns Inventory
Inventory that is reserved or set aside by a company, based on historical data, to account for future product returns from customers.
Physical Inventory
The process of counting the actual items in stock to verify records and ensure accuracy in inventory levels.
- Compute and assess critical financial indicators such as net retained earnings, operational income, and total gross profit.
Verified Answer
MC
marlynne cherutoJul 18, 2024
Final Answer :
A
Explanation :
Sales - Cost of goods sold = Gross profit; Gross profit - Selling expenses - Administrative expenses = Operating income
$1,600,000 - $822,000 = $778,000 - $380,000 - $262,000 = $136,000
Sales - Cost of goods sold = Gross profit; Gross profit - Selling expenses - Administrative expenses = Operating income
$1,600,000 - $822,000 = $778,000 - $380,000 - $262,000 = $136,000
Learning Objectives
- Compute and assess critical financial indicators such as net retained earnings, operational income, and total gross profit.