net income? (e) In what section of its classified balance sheet should Laquen re

Question

net income? (e) In what section of its classified balance sheet should Laquen report inventory? E5-13 Presented below is financial information for two different companies. ate. Winter Company Summer Company $92,000 Sales revenue Sales returns Net sales Cost of goods sold Gross proft Operating expenses Net income $ 5,000 102,000 87,000 56,000 41,500 15,000 18,000 Instructions (a) Determine the missing amounts. (b) Determine the gross profit rates. (Round to one decimal place.) E5-14 Financial information is presented below for three different companies. Hardy Cosmetics Wang Sales revenue Sales returns and allouo Grocery Wholesalers S (e) $122,000

Explanation / Answer

A)sales return = Sales revenue -Net sales

       = 92000-87000

        = 5000

b)Gross Profit =net sales -cost of goods sold

         = 87000-56000

          = 31000

c)Net Income = Gross profit -operating expense

       = 31000-15000

       = 16000

d)Sales revenue = Net sales +sales return

     = 102000+5000

      = 107000

e)Cost of goods sold =Net sales - Gross profit

               = 102000- 41500

               = 60500

f)OPerating expense = 41500 - 18000

           = 23500

b)Gross profit rates =Gross profit /net sales

Summer company = 31000/87000

                    = 35.6%

Winter company = 41500/102000

              = 40.7%

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