To find the missing values in the income statement, we need to follow a step-by-step approach, using the given figures to calculate the missing entries.
1. Calculate Net Sales:
Start by calculating the Net Sales which is the total sales minus the returns:
[tex]\[ \text{Net Sales} = \text{Sales} + \text{Returns} \][/tex]
Given:
[tex]\[ \text{Sales} = \$78,000 \][/tex]
[tex]\[ \text{Returns} = \$(1,500) \][/tex]
Therefore:
[tex]\[ \text{Net Sales} = \$78,000 - \$1,500 = \$76,500 \][/tex]
2. Calculate Gross Profit:
Gross Profit is calculated by subtracting the Cost of Goods Sold (COGS) from Net Sales:
[tex]\[ \text{Gross Profit} = \text{Net Sales} - \text{COGS} \][/tex]
Given:
[tex]\[ \text{Net Sales} = \$76,500 \][/tex]
[tex]\[ \text{COGS} = \$19,800 \][/tex]
Therefore:
[tex]\[ \text{Gross Profit} = \$76,500 - \$19,800 = \$56,700 \][/tex]
3. Calculate Net Income:
Net Income is calculated by subtracting overhead costs from Gross Profit:
[tex]\[ \text{Net Income} = \text{Gross Profit} - \text{Overhead} \][/tex]
Given:
[tex]\[ \text{Gross Profit} = \$56,700 \][/tex]
[tex]\[ \text{Overhead} = \$12,000 \][/tex]
Therefore:
[tex]\[ \text{Net Income} = \$56,700 - \$12,000 = \$44,700 \][/tex]
Thus, the completed income statement with the missing values filled in looks like this:
\begin{tabular}{|l|c|}
\hline \multicolumn{2}{|l|}{Income Statement} \\
\hline Sales & [tex]$\$[/tex]78,000[tex]$ \\
\hline Returns & $[/tex]\[tex]$(1,500)$[/tex] \\
\hline Net Sales & [tex]$\$[/tex]76,500[tex]$ \\
\hline COGS & $[/tex]\[tex]$(19,800)$[/tex] \\
\hline Gross Profit & [tex]$\$[/tex]56,700[tex]$ \\
\hline Overhead & $[/tex]\[tex]$(12,000)$[/tex] \\
\hline Net Income & [tex]$\$[/tex]44,700$ \\
\hline
\end{tabular}
