![]() Assume (Round your intermediate caiculations to 2 decimal places) 3 Answer is complete but not entirely correct. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. For specific identification, ending inventory co 250 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning inventoy nsists of 280 units, where Exercise 5-4 Perpetual: Income effects of inventory methods LO A1 Required: 1. ![]() 30 Purchase 148 units $19.89 250 units 555 units 8.52,125 Totals $5,045 275 units The Company uses a perpetual inventory system. (Round your Intermediate calculations to 2 decimal places.) ome Statements For Month Ended January 31 Complete comparative income statements for the month of January for Laker Company for the four inventory methods Assume expenses are $1.600, and that the applicable income tax rate is 40%. 25 Sales Totals sss units 5,045 27 unies The Company uses a perpetual inventory system For specific identification, ending inventory consists of 280 units, where 250 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning inventory ferences Exercise 5-4 Perpetual: Income effects of inventory methods LO A1 Required: 1. The following information applies to the questions displayed below Laker Company reported the following January purchases and sales data for its only product 50 points Book 75 units8 510.60 $1,750 10 unitse 59.00- 1,17 250 units9 8.50-2-12 an1 Beginning Inventery an. This means that CBS has a margin of 39% to cover operating expenses and profit.Transcribed image text: 0 Required information Use the following information for the Exercises below. Therefore, the Gross Profit Margin Ratio is computed as 0.39 (rounded to the nearest hundredth). Taking our example from CBS, net sales equaled ?293,500 and cost of goods sold equaled ?180,000. ![]() The larger the margin, the more availability the company has to reinvest in their business, pay down debt, and return dividends to shareholders. The gross profit margin ratio shows the margin of revenue above the cost of goods sold that can be used to cover operating expenses and profit. One ratio that can help them in this process is the Gross Profit Margin Ratio. The simple income statement might be more appropriate for external use, as a summary for investors and lenders.įrom the information obtained on the income statement, a company can make decisions related to growth strategies. The multi-step income statement may be more beneficial for internal use and management decision-making because of the detail in account information. While companies may choose the format that best suits their needs, some might choose a combination of both the multi-step and simple income statement formats. There are very few individual accounts and the statement does not consider cost of sales separate from operating expenses.įinal Analysis of the Two Income Statement Options A simple income statement combines all revenues into one category, followed by all expenses, to produce net income. Other revenue and expenses added to (or deducted from) income from operations produces net income (loss).Ī simple income statement is less detailed than the multi-step format. Other revenue and expenses examples include interest revenue, gains or losses on sales of assets (buildings, equipment, and machinery), and interest expense. Deducting the operating expenses from gross margin produces income from operations.įollowing income from operations are other revenue and expenses not obtained from selling goods or services or other daily operations. Operating expenses are broken down into selling expenses (such as advertising and marketing expenses) and general and administrative expenses (such as office supplies expense, and depreciation of office equipment). Operating expenses are daily operational costs not associated with the direct selling of products or services. The multi-step statement separates cost of goods sold from operating expenses and deducts cost of goods sold from net sales to obtain a gross margin. Each revenue and expense account is listed individually under the appropriate category on the statement. ![]() Because of the additional detail, it is the option selected by many companies whose operations are more complex. Similarities and Differences between the Multi-Step and Simple Income Statement FormatĪ multi-step income statement is more detailed than a simple income statement.
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