Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. Net income equals:.
a) $770,000.
b) $402,000.
c) $390,000.
d) $115,000.
e) $408,000.

The net income is $115,000

Explanation:

In this question, we are asked to calculate the net income.

Firstly, we calculate the net sales. The value of the net sales is simply total sales minus sales discount = 800,000 - 12,000 = 788,000

Secondly, we calculate the value of all the expenses: According to the question, this is equal to sales returns and allowances + cost of goods sold + operating expenses= 18,000 + 380,000 + 275,000 = 673,000

Net income = net sales - total expenses = 788,000 - 673,000 = $115,000

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