Accounting Ch 5

[The following information applies to the questions displayed below.] |

Morrisey & Brown, Ltd., of Sydney is a merchandising company that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company's income statements for the three most recent months follow: |

Morrisey & Brown, Ltd.

Income Statements

For the Three Months Ended September 30 |

  | July | August | September |

  Sales in units | -------------------------------------------------

4,000   | -------------------------------------------------

4,500   | -------------------------------------------------

5,000   |

  Sales revenue | A$ 400,000   | A$ 450,000   | A$ 500,000   |

  Cost of goods sold | -------------------------------------------------

240,000   | -------------------------------------------------

270,000   | -------------------------------------------------

300,000   |

  Gross margin | -------------------------------------------------

160,000   | -------------------------------------------------

180,000   | -------------------------------------------------

200,000   |

  Selling and administrative expenses: |   |   |   |

       Advertising expense | 21,000   | 21,000   | 21,000   |

       Shipping expense | 34,000   | 36,000   | 38,000   |

       Salaries and commissions | 78,000   | 84,000   | 90,000   |

       Insurance expense | 6,000   | 6,000   | 6,000   |

       Depreciation expense | -------------------------------------------------

15,000   | -------------------------------------------------

15,000   | -------------------------------------------------

15,000   |

  Total selling and administrative expenses | -------------------------------------------------

154,000   | -------------------------------------------------

162,000   | -------------------------------------------------

170,000   |

  Net operating income | -------------------------------------------------

A$ 6,000   |...