Reference no: EM131952368

In 2018, Boston Snow Car, a hardware retail company, sold 5,000 units of a snow blower at an average price of $400 per unit. The company reported returns and allowances in 2017 of $80,000. BSC actually purchased 5,500 from its manufacturer in 2017 at an average cost of $300 per unit . BSC began 2014 with 900 units of its product in inventory (carried at an average cost of $300 per unit). Operating expenses (excluding depreciation) for BSC in 2017 were $120,000 and depreciation expense was $50,000. BSC had $1,000,000 in debt outstanding throughout all of 2017. This debt carried an average interest rate of 10%. Finally, BSC's tax rate was 40% percent. BSC's fiscal year runs from Jan 1 to Dec 1.

Formula: Net sales= Gross sales - Returns and allowances

Cost of goods sole = Beginning inventory + Material purchases - ending inventory

Gross sales _______

Return and Allowance

Net Sales

cost of goods sold

Gross profit

Operating expenses (excl. depreciation)

Depreciation expense

Operating income

Interest expense

EBT

Taxes

Net income _____________