inclusion of merchandise inventory on the balance sheet as a current asset.
stockholders’ equity section of the balance sheet.
other income section of the income statement.
inclusion of a stockholders’ equity statement.

Net sales less cost of goods sold.
Total sales less merchandise returns and discounts.
Net sales less operating expenses.
Net sales less cost of goods sold less operating expenses.

Add Subtract
Add Add
Subtract Add
Subtract Subtract

$10,000
$25,000
$5,000
$30,000

$10,000
$200
$1,000
$0

decreases Accounts Payable by $2,000 and decreases cash by $2,000.
increases Merchandise Inventory by $2,000 and increases Accounts Payable by $2,000.
decreases Accounts Payable by $1,960 and decreases Merchandise Inventory by $1,960.
decreases Accounts Payable by $2,000, decreases Merchandise Inventory by $40, and decreases Cash by $1,960.

$1,005,000
$1,190,000
$1,105,000
Cannot be determined from the information given.

FOB destination
Freight in
FOB shipping point
Transportation in

Subtract $10,000 from net income.
Add $10,000 to net income.
Subtract $20,000 from net income.
Add $20,000 to net income.

As a contra asset.
As a reduction to merchandise inventory.
As an increase to merchandise inventory.
As a separate liability account.