Submitted by: Submitted by lewlewis2
Views: 10
Words: 2345
Pages: 10
Category: Business and Industry
Date Submitted: 10/23/2015 10:16 AM
SOLUTIONS CHPS 2,3,4
4. Operating Profit (LO1) A-Rod Fishing Supplies had sales of $2,000,000 and cost of goods sold of $1,250,000. Selling and administrative expenses represented 8 percent of sales. Depreciation was 5 percent of the total assets of $4,000,000. What was the firm’s operating profit?
SOLUTIONS 2-4
A-Rod Fishing Supplies
Sales $2,000,000
Cost of goods sold 1,250,000
Gross Profit 750,000
Selling and administrative expense* 160,000
Depreciation expense** 200,000
Operating profit $ 390,000
* 8% × $2,000,000 = $160,000
** 5% × $4,000,000 = $200,000
5. Income statement (LO1) Arrange the following income statement items so they are in the proper order of an income statement:
Taxes Earnings per share
Shares outstanding Earnings before taxes
Interest expense Cost of goods sold
Depreciation expense Earnings after taxes
Preferred stock dividends Earnings available to common
Operating profit stockholders
Sales Selling and administrative expense
Gross profit
2-5. Solution:
Sales
-Cost of goods sold
Gross profit
-Selling and administrative expense
-Depreciation expense
Operating profit
-Interest expense
Earnings before taxes
-Taxes
Earnings after taxes
-Preferred stock dividends
Earnings available to common stockholders
Shares outstanding
Earnings per share
6. Income statement (LO1) Given the following information prepare in good form an income statement for the Dental Drilling Company.
Selling and administrative expense $ 60,000
Depreciation expense 70,000
Sales 470,000
Interest expense 40,000
Cost of goods sold 140,000
Taxes 45,000
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2-6. Solution:
Dental Drilling Company
Income Statement
Sales $ 470,000
Cost of goods sold $ 140,000
Gross Profit $ 330,000
Selling and administrative expense $...