ABC Inc. is a retail company that sells clothing and accessories. The company has the following transactions for the year ended December 31, 2022:

1. The company purchased inventory worth $500,000 on credit.

2. The company sold inventory for $1,000,000, of which 75% was on credit.

3. The company received payments worth $600,000 from customers who had purchased inventory on credit.

4. The company paid $300,000 to suppliers for inventory purchased on credit.

5. The company incurred operating expenses of $200,000, which were paid in cash.

6. The company incurred interest expense of $10,000, which was also paid in cash.

7. The company paid income tax expense of $50,000.

a) Prepare the company's income statement for the year ended December 31, 2022.

b) Calculate the company's gross profit, operating profit, and net profit for the year ended December 31, 2022.

c) Calculate the company's accounts receivable turnover ratio and average collection period for the year ended December 31, 2022.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below a The companys income statement for the ... View the full answer