1. Candy Company had sales of $230,000 and cost of goods sold of $101,200. What

Question

1. Candy Company had sales of $230,000 and cost of goods sold of $101,200. What is the gross profit margin (ratio of gross profit to sales)?

2. Density Farms, Inc. had sales of $500,000, cost of goods sold of $180,000, selling and administrative expense of $74,000, and operating profit of $93,000. What was the value of depreciation expense?

3. Elgin Battery Manufacturers had sales of $950,000 in 2009 and their cost of goods sold represented 69 percent of sales. Selling and administrative expenses were 7 percent of sales. Depreciation expense was $11,000 and interest expense for the year was $9,000. The firm's tax rate is 26 percent. What is the dollar amount of taxes paid?

4. A-Rod Fishing Supplies had sales of $2,440,000 and cost of goods sold of $1,750,000. Selling and administrative expenses represented 8 percent of sales. Depreciation was 4 percent of the total assets of $4,870,000. What was the firm’s operating profit?

5. ABC Co. has an average collection period of 60 days. Total credit sales for the year were $4,100,000. What is the balance in accounts receivable at year-end? (Use 360 days in a year. Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

6. XYZ Co. has forecasted June sales of 900 units and July sales of 1,700 units. The company maintains ending inventory equal to 125% of next month's sales. June beginning inventory reflects this policy. What is June's required production?

7. A firm has beginning inventory of 300 units at a cost of $6 each. Production during the period was 660 units at $13 each. If sales were 760 units, what is the cost of goods sold (assume FIFO)?

8. The preferred stock of Denver Savings and Loan pays an annual dividend of $6.80. It has a required rate of return of 8 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Compute the price of the preferred stock.

Explanation / Answer

1) candy company sales = 230000 and cost of goods sold= 101200

gross proft margin =230000-101200=128800/230000=0.56

2) Density farms sales=50000-180000-74000- 153000(Depreceation)=93000( operating profit)

so depreciation expences are =$153000

3) Elign battery sales =950000-655500(cost of goods sold 69% of sales)=294500-66500(selling and admin expences)=228000-11000(dep)=217000-9000(intrest)=208000-54080(tax at 26%)

so the dollar amount of taxes are $ 54080

4)A Rod fishing supplies sales =2440000-1750000(cost of goods sale)=690000-195200(selling and admin expences)=494800-194800(dep)=300000

so the operating profit=$ 300000

5) ABC co sales =$ 4100000 average collection period =60 days

so outstanding balance of Accounts Receivables=> average collecion period= no of days *AR/credit sales

60=360*AR/4100000 => 4100000*60 = 360*AR

AR= 4100000*60/360= 683333

so the balace in the Accounts Receivables=$ 683,333

6) junes required production =2125 (125/100*1700)

7) cost of inventory at the begining =330*6=1800 sales are 760 units

production during the period 660 units at $ 13 so the remaing units required 460 units at cost $ 13

total cost of goods sold =300 units at $ 6+ 460 units *13=$ 7780

8) Price of peferred stock= V=D/K 6.80/0.08 =$ 85

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