Part A. The following information is available for Entity A:Sales revenueSales returns and allowancesSales discountsCost of goods soldOperating expensesInterest expenseGain on sale of landInterest revenue$840,30010,0007,800475,000187,20011,000129,3003,500Instructions1. Use the above information to prepare a multiple-step income statement for the yearended December 31, 2024. Please look at Illus. 5.12 in the text for an example. Theincome tax rate is 23%. Check figures: Income from operations is $160,300. Netincome is $217,217.2. Compute the profit margin and the gross profit rate. Show and label calculations.3. Suggest at least three ways these measures might be materially improved and netincome increased. Be sure to consider the relationship between net sales, cost-of-goods-sold and gross profit.4. Last year, the profit margin was 15%. Is the increase in the profit margin this yearsustainable, i.e. likely to continue? (Hint: consider what item was largely responsiblefor such an increase.)

"Since you have asked a question with sub-parts more than three, as per guidelines, the first three…

Part A. The following information is available for Entity A: Sales revenue Sales returns and allowances Sales discounts Cost of goods sold Operating expenses Interest expense Gain on sale of land Interest revenue $840,300 10,000 7,800 475,000 187,200 11,000 129,300 3,500

Part A. The following information is available for Entity A: Sales revenue Sales returns and allowances Sales discounts Cost of goods sold Operating expenses Interest expense Gain on sale of land Interest revenue $840,300 10,000 7,800 475,000 187,200 11,000 129,300 3,500

College Accounting (Book Only): A Career Approach

12th Edition

ISBN:9781305084087

Author:Cathy J. Scott

Publisher:Cathy J. Scott

Chapter12: Financial Statements, Closing Entries, And Reversing Entries

Section: Chapter Questions

Problem 3E

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Concept explainers

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

Part A. The following information is available for Entity A:
Sales revenue
Sales returns and allowances
Sales discounts
Cost of goods sold
Operating expenses
Interest expense
Gain on sale of land
Interest revenue
$840,300
10,000
7,800
475,000
187,200
11,000
129,300
3,500
Instructions
1. Use the above information to prepare a multiple-step income statement for the year
ended December 31, 2024. Please look at Illus. 5.12 in the text for an example. The
income tax rate is 23%. Check figures: Income from operations is $160,300. Net
income is $217,217.
2. Compute the profit margin and the gross profit rate. Show and label calculations.
3. Suggest at least three ways these measures might be materially improved and net
income increased. Be sure to consider the relationship between net sales, cost-of-
goods-sold and gross profit.
4. Last year, the profit margin was 15%. Is the increase in the profit margin this year
sustainable, i.e. likely to continue? (Hint: consider what item was largely responsible
for such an increase.)

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