18,100 156,000 15,120 Administrative Expense Cost of Goods Sold Income Tax Expen

Question

18,100 156,000 15,120 Administrative Expense Cost of Goods Sold Income Tax Expense Sales Retuns and Allowances 6,510 Selling Expense Sales of Merchandise on Cash 222,000 Sales of Merchandise for Credit38,400 36,600 Required: 1. Prepare a multistep income statement for internal reporting purposes JOEMONTANA INCORPORATED Income Statement For the Year Ended December 31 Operating Expenses Total Operating Expenses 2. What was the gross profit percentage? (Round your answer to 2 decimal places.) s Profit Percentage

Explanation / Answer

Answer 1. JOEMONTANA INCORPORATED Income Statement For the Year Ended Dec 31, 2013 Sales: Sales of Merchandise on Cash    222,000.00 Sales of Merchandise For Credit      38,400.00 Gross Sales    260,400.00 Less: Sales Returns & Allowances        6,510.00 Net Sales    253,890.00 Cost of Goods Sold    156,000.00 Gross Profit      97,890.00 Operating Expenses: Administrative Expenses    18,100.00 Selling Expenses    36,600.00 Total Operating Expenses      54,700.00 Net Operating Income      43,190.00 Income Tax Expense      15,120.00 Net Income      28,070.00 Answer 2. Gross Profit Percentage = Gross Profit / Sales Gross Profit Percentage = $97,890 / $253,890 Gross Profit Percentage = 38.56% (Approx.) Answer 3 -D. $19,600 Cost of Goods Available for Sale Date Explanation Units Unit Cost Total Cost Op. Inventory                -                  -                  -   Jan Purchases         1,250         15.00      18,750 Feb Purchases         1,500         14.00      21,000 Mar Purchases            700         16.00      11,200 Total         3,450      50,950 Ending Inventory (In Units) =3,450 Units - 1,300 Units = 2,150 Units LIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Jan                  1,250               15      18,750 Feb                      900               14      12,600 Total                  2,150      31,350 Cost of Goods Sold: Cost of Goods Available for Sale      50,950 Less: Ending Inventory      31,350 Cost of Goods Sold      19,600 Answer 4 -A. $14,983 Average Cost Per Unit = $50,950 (Cost of goods available for sale) / 3,450 Units ( Units Available for Sale) Average Cost Per Unit = $14.77 per Unit (Approx.) Ending Inventory (In Units) =3,450 Units - 1,150 Units = 2,300 Units Value of Ending Inventory = 2,300 Units X $14.77 = $33,966.67 or say $33,967 Cost of Goods Sold: Cost of Goods Available for Sale      50,950 Less: Ending Inventory      33,967 Cost of Goods Sold      16,983

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