Accounting HW3

HW3

E5-8

E5-6

E5-7

E6-9

E6-10

P6-2B

E5-6

Yu Co.

Income Statement for the Month Ended January 31, 2012

Sales Revenue370,000

$

Less: Sales Discounts(8,000)

Less: Sales Returns and Allowances(20,000)

Net Sales342,000

Cost of Goods Sold212,000

$

Gross Profit130,000

Operating Expenses

Salary Expense60,000

Freight-out Expense7,000

Rent Expense32,000

Insurance Expense12,000

Total Operating Expenses111,000

$

EBT19,000

Tax Expense4,750

$

Net Income14,250

Profit Margin 4.17%

Gross Profit Rate38.01%

E5-7Indig Company

$

Sales Revenue90,000

Sales Returns6,000Sales Revenue - Net Sales

$

Net Sales84,000

COGS58,000

$ Net Sales - COGS

Gross Profit26,000

Operating Expenses14,380

$ Gross Profit - Operating Expenses Net Income11,620

Profit Margin13.83%

Gross Profit Rate30.95%

Perez Company

$ Net Sales + Sales Returns Sales Revenue105,000

Sales Returns5,000

$

Net Sales100,000

COGS60,000Net Sales - Gross Profit

Gross Profit40,000

$

Operating Expenses23,000Gross Profit - Net Income

$

Net Income17,000

Profit Margin17.00%

Gross Profit Rate40.00%

c)Perez company has a superior profit margin and gross profit rate.

For every dollar of sales, Perez gets 17 cents of income

E5-8

Misra Company

Income Statement

For the Year ended December 31, 2012

$

Net Sales2,050,000

Cost of Goods Sold987,000

$

Gross Profit1,063,000

Operating Expenses

Administrative465,000

Selling Expenses420,000

$

Income from Operations178,000

Other Revenues

Interest Revenue65,000

Other Losses

Loss on sale of equipment83,500

Interest Expense71,000

$

EBT88,500

Tax Expense25,000

$

Net Income63,500

Profit Margin 3.10%

Gross Profit Rate51.85%

c) The decline is not cause for concern because the loss on disposal of asset accounts for the decrease and it is likely a non-recurring issue

E6-9

Cameras

$

Minolta790

Canon1015

$

Total1,805

Light Meters

$

Vivitar1,368

Kodak1200

Total2,568

$

$

Total Inventory4,373

E6-10

200720082009

Inventory Turnover

8.56 8.46 7.82 Inventory Days

42.66 43.15 46.67 Gross Profit Rate 54.30%52.95%53.51%

Inventory turnover is decreasing which thereby increases days inventory

This means that the inventory is moving much slower which may be a response to economy P6-2B

a)

Units Price Cost Beg.

1,200 5$ 6,000$ 3-Oct

4,000 6 24,000 9-Oct

3,000 7 21,000 19-Oct

2,500 8 20,000 25-Oct

2,000 9 18,000 Total 12,700 89,000$ Cost of Goods Available for Sale

b)Units Price Cost

19-Oct 1,300 8 10,400

25-Oct 2,000 9 18,000

Total 3,300 28,400$ Ending Inventory

COGS = COGA - Ending Inventory

######

Proof

Units Price Cost

Beg.1,200 5$ 6,000

$ 3-Oct 4,000 6 24,000

9-Oct 3,000 7 21,000

19-Oct 1,200 8 9,600

Total 9,400 60,600

$ Units Price Cost

Beg.1,200 5$ 6,000

$ 3-Oct 2,100 6 12,600

Total 2,100 18,600$ Ending Inventory

COGS 70,400

$ Proof

Units Price Cost

3-Oct 1,900 6 11,400

9-Oct 3,000 7 21,000

19-Oct 2,500 8 20,000

25-Oct 2,000 9 18,000

Total 9,400 70,400

$ Total Cost/Units 7.00787402

COGA Units Price Cost

#######3,300 7.01$ 23,125.98

FIFO LIFO

COGS65,874

$

c) FIFO results in highest inventory LIFO results in highest COGS

s for the decrease

nomy