On January 1, 2017, Brooke Hanson Corporation had inventory of $50,000. At December 31, 2017, Brooke Hanson had the following account balances.
Freight-in $ 4,000
Purchases 509,000
Purchase discounts 6,000
Purchase returns and allowances 2,000
Sales revenue 840,000
Sales discounts 5,000
Sales returns and allowances 10,000
At December 31, 2017, Brooke Hanson determines that its ending inventory is $60,000.
Instructions:
(a) Compute Brooke Hanson’s 2017 gross profit.
(b) Compute Brooke Hanson’s 2017 operating expenses if net income is $130,000 and there are no non-operating activities.
