Accounting for Merchandising Operations

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
Purchases509,000
Purchase discounts6,000
Purchase returns and allowances2,000
Sales Revenue840,000
Sales discounts5,000
Sales returns and allowances10,000

At December 31, 2019, Brooke Hanson determines that its ending inventory is $60,000.

Instructions

  1. Compute Brooke Hanson's 2019 gross profit.
  2. 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
 
b.
Operation Expenses = Gross profit - net profit = $380,000 - $130,000 = $250,000
 
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