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Clever Cuts is a retail chain specializing in​ salon-quality hair-care products. During the​ year, Clever Cuts had sales of $ 39 comma 300 comma 000. The company began the year with $ 3 comma 100 comma 000 of merchandise inventory and ended the year with $ 4 comma 115 comma 000 of inventory. During the​ year, Clever Cuts purchased $ 21 comma 400 comma 000 of merchandise inventory. The​ company's selling,​ general, and administrative expenses totaled $ 7 comma 225 comma 000 for the year. Prepare Clever Cuts' income statement for the year.

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Answer:

Sales Revenue                                                       $39,300,000

Cost of Goods Sold                                               ($20385000)  

Gross Profit                                                            $18915000

Selling, General and Administrative Expenses   ($7,225,000)  

Net Income                                                             $11690000

Explanation:

Sales Revenue                                                       $39,300,000

Cost of Goods Sold                                               ($20385000)  

Gross Profit                                                            $18915000

Selling, General and Administrative Expenses   ($7,225,000)  

Net Income                                                             $11690000  

Cost of Goods Sold is calculated as (Opening Inventory + Purchases – Closing Inventory) ($3,100,000 + $21,400,000 - $4,115,000).

Sales Revenue is deducted from Cost of Goods Sold to find Gross Profit after which Selling, General and Administrative Expenses are deducted which gives us Net Income of $11690000.

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