A woman sells her home for \$450{,}000. She had purchased it for \$300{,}000. What is the net sales amount to be reported on the income statement from this transaction?

• A. \$450{,}000
• B. \$0
• C. \$300{,}000
• D. \$150{,}000

Answer: (A)

Verified step by step guidance

1. Understand the concept: The income statement reports revenues and gains from transactions. In this case, the sale of the home is a transaction, and the net sales amount refers to the revenue generated from the sale, not the profit or loss.
2. Identify the selling price: The woman sold her home for \$450,000. This is the revenue generated from the transaction and is the amount to be reported on the income statement.
3. Clarify the distinction: The purchase price of \$300,000 and the profit of \$150,000 (calculated as \$450,000 - \$300,000) are not directly reported as the net sales amount on the income statement. Only the selling price is reported as revenue.
4. Review the options provided: The correct answer is the selling price, which is \$450,000. The other options (\$0, \$300,000, and \$150,000) do not represent the net sales amount for this transaction.
5. Conclude: The net sales amount to be reported on the income statement is the selling price of \$450,000, as it represents the revenue from the transaction.