The owner of a local souvenir shop in Garden City Beach is in the process of pre

Question

The owner of a local souvenir shop in Garden City Beach is in the process of preparing an income statement at the end of the year. Given below is certain financial information for the period.
Merchandise Inventory - Beginning of year $25,000
Merchandise Inventory - end of year $20,000
Purchases $105,000
Freight - in $4,000
Sales $220,000
Property Taxes - Store $8,000
Depreciation - Store $16,000
Insurance - Store $10,000
Salary - Sales Staff $24,000
Advertising $5,000

In an attempt to evaluate how well she is doing, she would like to calculate her Gross Profit or Margin for the year. Sketching out an income statement may help you arrive at this value. What is the Gross Margin?

Explanation / Answer

Income statement

Particulars

$

$

Income statement

Particulars

$

$

Revenue: Gross sales 220,000 Less sales returns and allowences 0 Net sales 220,000 $220,000 Cost of sales: Beginning inventory 25,000 Purchases 105,000 Freight in 4,000 Ending inventory -20,000 Cost of goods sold 114,000 Gross profit $106,000 Operating expenses: Depreciation 16,000 Insurance 10,000 Salary 24,000 Advertising 5,000 55,000 Net income before taxes $51,000 Taxes 8,000 Net income after taxes $43,000 Extrordinary loss 0 Net income $43,000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.