On January 1, 2010, Rachael Ray Corporation had merchandise inventory of $50,000. At December 31, 2010, Rachael Ray had the following account balances.
Freight-in........... $ 4,000
Purchases........... 500,000
Purchase discounts...... 6,000
Purchase returns and allowances.. 2,000
Sales............ 800,000
Sales discounts........ 5,000
Sales returns and allowances.. 10,000
At December 31, 2010, Rachael Ray determines that its ending inventory is $60,000.
Instructions
(a) Compute Rachael Ray's 2010 gross profit.
(b) Compute Rachael Ray's 2010 operating expenses if net income is $130,000 and there are no non-operating activities.