41a)A company had a gross profit of $340,000 based on sales of $420,000. Its cos

Question

41a)A company had a gross profit of $340,000 based on sales of $420,000. Its cost of goods sold equals $760,000.True or False?
b)A company's net sales were $727,700, its cost of goods sold was $244,510 and its net income was $62,450. Its gross margin ratio equals:
c)On December 1, Simpson Marketing Company received $5,700 from a customer for a 2-month marketing plan to be completed January 31 of the following year. The cash receipt was recorded as unearned fees. The adjusting entry for the year ended December 31 would include:
d)At the end of its first month of operations, Michael's Consulting Services reported net income of $25,300. They also had account balances of: Cash, $18,200; Office Supplies, $2,050 and Accounts Receivable $10,100. The owner's total investment for this first month was $5,050. There were no owner withdrawals in the first month
-Calculate the ending balance in the Owner's Capital account to be reported on the Statement of Owner's Equity.

Explanation / Answer

Answer 41a Gross Profit / (Loss) = Sales - Cost of goods sold = $420000 - $760000 = -$340000 The statement is False. There is a Gross Loss of $340000. Answer 41b Gross Margin ratio = Gross Profit / Net Sales = (Net Sales - Cost of goods sold) / Net Sales = ($727700 - $244510)/$727700 = 66.40% Answer 41c Adjusting entry for the year ended December 31 would include, Account Titles Debit Credit Unearned Fees $2,850.00 Service Revenue $2,850.00 (to record 1 month revenue) Answer 41d Calculation of the ending balance in the Owner's Capital account to be reported on the Statement of Owner's Equity. Owner's total investment for this first month $5,050.00 Add : Net Income for the month $25,300.00 Ending balance in Owner's Capital $30,350.00

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