The following information was taken from the financial statements of Bjorg Compa

Question

The following information was taken from the financial statements of Bjorg Company: Gross profit on sales 014 2013 Net incom Net income as a percentage of net sale 230,000 221,000 180,000 153,000 10% 9% Instructions: (12 points-2 points each) Compute the net sales for each year. 5. 2014 186bo 6. 2013 2100+000 Compute the cost of goods sold in dollars and as a percentage of net sales for each year. 7. 2014 8. 2013 tage of net sales for each year. (Income taxes are not operating expenses). 9. 2014 10. 2013

Explanation / Answer

Solution: Net Sales = Net Income / Net income %

5. 2014 = 180,000 / 10% = $1,800,000

6. 2013 = 153,000 / 9% = $1,700,000

Cost of goods sold = Net Sales - Gross Profit

7. 2014 = $1,800,000 - $600,000 = $1,200,000

8. 2013 = $1,700,000 - $680,000 = $1,020,000

And as Percentage = (Cost of goods sold / Net sales) x 100

7. 2014 = ($1,200,000 / $1,800,000) x 100 =66.67%

8. 2013 = ($1,020,000 / $1,700,000) x 100 = 60%

Operating expenses = Gross profit - Income before income tax

9. 2014 = $600,000 - $230,000 = $370,000

10. 2013 = $680,000 - $221,000 = $459,000

And as percentage = (Operating expense / Net sales) x100

9. 2014 = ($370,000 / $1,800,000) x100 = 20.56%

10. 2013 = ($459,000 / $1,700,000) x 100 = 27%

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