TCOs B and D) The following items are taken from the financial statements of But

Question

TCOs B and D) The following items are taken from the financial statements of Butler Company for 2012: Accounts Receivable $20,000 95,000 Cost of Goods Sold Utilities Expense Accounts Payable Common Stock Rent Expense Advertising Expense Dividends Insurance Expense Note Payable (due 2014) Depreciation Expense Prepaid Insurance Accumulated Depreciation Retained Earnings (beginning) Salaries Expense Salaries Payable 3,500 7,000 100,000 5,500 9,000 10,000 2,000 50,000 10,000 18,000 30,000 33,000 40,000 4,500 170,000 Net sales

Explanation / Answer

a) Butler Company Income Statement Net sales $170,000.00 Less : COGS $95,000.00 Gross Profit $75,000.00 Less: Operating Expenses Utilities Expense $3,500.00 Rent Expense $5,500.00 Advertising Expense $9,000.00 Insurance Expense $2,000.00 Depreciation Expense $10,000.00 Salaries Expense $40,000.00 Supplies Expense $2,500.00 Total Operating Expenses $72,500.00 Net Profit $2,500.00 b) Statement of Retained Earnings Retained Earnings, January 1 $33,000.00 Add: Net Income $2,500.00 Less: Dividends -$10,000.00 Retained Earnings, December 31,2012 $25,500.00 c) Gross Profit % = $75,000/ $170,000 44.12%

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