Selma operates a contractor's supply store. She maintains her books using the cash method. At the end of 2020, her accountant computes her accrual basis income that is used on her tax return. For 2020, Selma had cash receipts of $1,400,000, which included $200,000 collected on accounts receivable from 2019 sales. It also included the proceeds of a $100,000 bank loan. At the end of 2020, she had $250,000 in accounts receivable from customers, all from 2020 sales. Required:
a. Compute Selma's accrual basis gross receipts for 2020
b. Selma paid cash for all of the purchases. The total amount paid for merchandise in 2014 was $1.3 million. At the end of 2019, she had merchandise on hand with a cost of $150,000. At the end of 2020, the cost of merchandise on hand was $300,000. Compute Selma's gross income from merchandise sales for 2020.

a. $1,350,000

b. $200,000

Explanation:

a. Selma's accrual basis gross receipts for 2020

= cash receipts + accounts receivables - cash collected from 2019 sales - bank loan

= $1,400,000 + $250,000 - $200,000 -

$100,000

= $1,350,000

b. Selma's gross income from merchandise sales 2020.

We need to calculate first the cost of goods sold during 2020.

The cost of goods sold during 2020

= Total purchase made during 2020 + ending inventory 2019 - ending inventory 2020

= $1,300,000 + $150,000 - $300,000

= $1,150,000

The Gross profit for 2020

= Gross receipts - Cost of goods sold

= $1,350,000 - $1,150,000

= $200,000

muslims control the north africa during the period of 1500 up

to 1800. they made a barrier to prevent further european exploration from

entering the africa from the north. however, the dutch ware still able to move

toward the interior with having south africa as one of the routes leading to

the east for trading with asia.

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