Financial Accounting
3rd Edition
ISBN: 9780078025549
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Chapter 6, Problem 6.16E
1.
To determine
To calculate:
- a. Gross profit.
- b. Operating income.
- c. Income before income taxes.
- d. Net income.
2.
To determine
To calculate: The Gross profit and to indicate which company has the most favorable ratio.
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b. Comment on each of the ratios calculated in part (a).
ABOVE IS THE QUESTION THAT I NEED ANSWER, BELOW IS THE QUESTION (A) ANSWER THAT MENTIONED IN QUESTION (B)
a) Calculate the following ratios for Company A and Company B. State clearly the formulae used for each ratio:
ANSWER
i) Gross Profit Margin
Formula:
Gross profit Margin = ( Gross profit / Net sales ) x 100
Company A :
= ( 40000 / 160000 ) x 100
= 25 %
Company B :
= ( 60000 / 240000 ) x 100
= 25 %
ii)Net Profit Margin
Net profit Margin = ( Net profit / Net sales ) x 100
Company A :
= ( 9000 / 160000 ) x 100
= 5.625 %
Company B:
= ( 18000 / 240000 ) x 100
= 7.5 %
iii) Inventory Turnover Period (days)
Inventory Turnover Period (days) = ( Inventory / Cost of sales ) x 365
Company A:
= ( 30000 / 120000 ) x 100
= 25 %
Company B:
= ( 50000 / 180000 ) x 100
= 27.777 %
iv) Receivables Collection Period (days)
Receivables Collection Period (days) = ( Receivables / Net sales ) x 365…
Which of the following statements are true?A) Common-size balance sheet shows relative value of the various items.B) In the common size income statement, each product is represented as a percentage of the net sales figure.C) Common size income statements represent the various elements as a percentage of the gross profit.
Select one:
a. A, B, C
b. Both A and C
c. Both A and B
d. Both B and C
Using the information provided below from Ben Company prepare two income
statements: A normal GAAP Income Statement A CVP Income Statement These
Income Statements should be done in good form and in Excel. Include formulas.
Chapter 6 Solutions
Financial Accounting
Ch. 6 - Prob. 1RQCh. 6 - Prob. 2RQCh. 6 - What is the difference among raw materials...Ch. 6 - Prob. 4RQCh. 6 - Prob. 5RQCh. 6 - What is a multiple-step income statement? What...Ch. 6 - Cheryl believes that companies report cost of...Ch. 6 - What are the three primary cost flow assumptions?...Ch. 6 - 9.Which cost flow assumption generally results in...Ch. 6 - Prob. 10RQ
Ch. 6 - Prob. 11RQCh. 6 - 12.Explain how LIFO generally results in lower...Ch. 6 - Prob. 13RQCh. 6 - Explain how freight charges, purchase returns, and...Ch. 6 - Prob. 15RQCh. 6 - Prob. 16RQCh. 6 - Prob. 17RQCh. 6 - Prob. 18RQCh. 6 - Prob. 19RQCh. 6 - How is gross profit calculated? What is the gross...Ch. 6 - 21.Explain how the sale of inventory on account is...Ch. 6 - Prob. 22RQCh. 6 - Prob. 23RQCh. 6 - Prob. 24RQCh. 6 - Prob. 6.1BECh. 6 - Prob. 6.2BECh. 6 - Calculate cost of goods sold (LO62) At the...Ch. 6 - Prob. 6.4BECh. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.8BECh. 6 - Identify financial statement effects of FIFO and...Ch. 6 - Prob. 6.10BECh. 6 - Prob. 6.11BECh. 6 - Prob. 6.12BECh. 6 - Prob. 6.13BECh. 6 - Prob. 6.14BECh. 6 - Prob. 6.15BECh. 6 - Prob. 6.16BECh. 6 - Prob. 6.17BECh. 6 - Prob. 6.18BECh. 6 - Prob. 6.19BECh. 6 - Prob. 6.20BECh. 6 - Prob. 6.21BECh. 6 - Prob. 6.22BECh. 6 - Calculate cost of goods sold (LO62) Russell Retail...Ch. 6 - Prob. 6.2ECh. 6 - Prob. 6.3ECh. 6 - Calculate inventory amounts when costs are rising...Ch. 6 - Calculate inventory amounts when costs are...Ch. 6 - Record Inventory transactions using o perpetual...Ch. 6 - Record inventory purchase and purchase return...Ch. 6 - Prob. 6.8ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10ECh. 6 - Record transactions using a perpetual system...Ch. 6 - Record transactions using a perpetual system...Ch. 6 - Prob. 6.13ECh. 6 - Prob. 6.14ECh. 6 - Calculate cost of goods sold, the inventory...Ch. 6 - Prob. 6.16ECh. 6 - Prob. 6.17ECh. 6 - Prob. 6.18ECh. 6 - Record inventory purchases and sales using a...Ch. 6 - Prob. 6.20ECh. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.2APCh. 6 - Prob. 6.3APCh. 6 - Prob. 6.4APCh. 6 - Prob. 6.5APCh. 6 - Prob. 6.6APCh. 6 - Prob. 6.7APCh. 6 - Prob. 6.8APCh. 6 - Record transactions and prepare a partial income...Ch. 6 - Prob. 6.10APCh. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.2BPCh. 6 - Prob. 6.3BPCh. 6 - Prob. 6.4BPCh. 6 - Prob. 6.5BPCh. 6 - Prob. 6.6BPCh. 6 - Prob. 6.7BPCh. 6 - Use the inventory turnover retio end gross profit...Ch. 6 - Record transactions and prepare a partial income...Ch. 6 - Prob. 6.10BPCh. 6 - Prob. 6.1APCPCh. 6 - Prob. 6.2APFACh. 6 - Prob. 6.3APFACh. 6 - Prob. 6.4APCACh. 6 - Prob. 6.5APECh. 6 - Prob. 6.6APIRCh. 6 - Written Communication You have just been hired as...Ch. 6 - Prob. 6.8APEM
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