ABC Company accrual basis profit is computed as follows: Sales $ 2,500,000 Cost of Sales: Inventory, Jan.1 $ 600,000 Net purchases 1,400,000 Cost of...

ABC Company accrual basis profit is computed as follows:

Sales                                                                                             $ 2,500,000

Cost of Sales:

         Inventory, Jan.1                               $     600,000

         Net purchases                                    1,400,000

         Cost of gods available for sale         2,000,000

         Inventory, Dec.31                                 (400,000)             1,600,000

Gross Profit                                                                                   $  900,000

Other Income                                                                                  100,000

Operating expenses                                                                        (700,000)

Profit for the year                                                                        $  300,000

Additional Information:

• Operating expenses include depreciation of $70,000

• Other income includes interest income of $80,000, $10,000 of which pertains to amortization of discount on investment in bonds.

• Accounts receivable decreased by $100,000, prepaid expenses increased by $50,000, accrued expenses increased by $20,000, and accounts payable decreased by $60,000

Requirement: Compute for ABC’s Cash Basis Profit.