Accounting Forum

stice19_student_04-29.xlsx

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04-29

4-29							Name:
	Enter the appropriate amounts/formulas in the blue-shaded cells.
	The word “Wrong” will appear to the left of incorrect entries.
	Hint: Complete supporting computations as needed to plug in determined amounts into income statement.
	SUPPORTING COMPUTATIONS
	Cost of goods sold as a percentage of sales:
	If general expenses = 15% of sales and 25% of cost of goods sold then:
		15%	of sales	=	25%	of cost of goods sold
		Cost of goods sold		=			/
		Cost of goods sold		=			of sales
	Income before income taxes as a % of sales:
	Sales							100%
	Cost of goods sold (percentage from above)
	Gross profit on sales
	Selling expenses
	General expenses
	Income before income taxes as a percentage of sales
	Sales:
	Income before income taxes							$ 160,000
	/ income before income taxes percentage (from above)
	Sales
	Net purchases:
	Cost of goods sold
	Less: Beginning inventory							136,000
	Plus: Ending inventory
	Net purchases
	Selling expenses:
	Sales (dollar amount from above)
	x Selling expenses percentage (from above)
	Selling expenses
	General expenses (including doubtful accounts):
	Sales (dollar amount from above)
	x General expenses as a percentage of sales
	Sales (dollar amount from above)
	x Doubtful accounts as a percentage of sales
	Total general expenses
	Earnings per share:
	Income before extraordinary items
	Divided by shares of common stock						/	130,000
	Income from operations per share
	Extraordinary gain (net of income taxes)							$ 21,000
	Divided by shares of common stock						/	130,000
	Extraordinary gain per share
	CARIBOU INC.
	Income Statement
	For the Year Ended December 31, 2015
	Sales
	Cost of goods sold:
		Beginning inventory						$ 136,000
		Net purchases
		Cost of goods available for sale
		Less: Ending inventory
		Cost of goods sold
	Gross profit on sales
	Operating expenses
		Selling expenses
		General expenses (including doubtful accounts)
	Income before income taxes and extraordinary items
	Income taxes
	Income before extraordinary items
	Extraordinary gain (net of income taxes of $9,000)								$ 21,000
	Net income
	Earnings per share:
		Income before extraordinary items
		Extraordinary gain
		Net income

Solution

4-29							Name:	Solution
	Enter the appropriate amounts/formulas in the blue-shaded cells.
	The word “Wrong” will appear to the left of incorrect answers.
	Hint: Complete supporting computations as needed to plug in determined amounts into income statement.
	SUPPORTING COMPUTATIONS
	Cost of goods sold as a percentage of sales:
	If general expenses = 15% of sales and 25% of cost of goods sold then:
		15%	of sales	=	25%	of cost of goods sold
		Cost of goods sold		=		15%	/		25%
		Cost of goods sold		=		60%	of sales
	Income before income taxes as a % of sales:
		Sales						100%
		Cost of goods sold (percentage from above)						60%
		Gross profit on sales						40%
		Selling expenses				13%
		General expenses				17%		30%
		Income before income taxes as a percentage of sales						10%
	Sales:
	Income before income taxes							$ 160,000
	/ income before income taxes percentage (from above)							10%
	Sales							$ 1,600,000
	Net purchases:
	Cost of goods sold							$ 960,000
	Less: Beginning inventory							136,000
	Plus: Ending inventory							95,200
	Net purchases							$ 919,200
	Selling expenses:
	Sales (dollar amount from above)							$ 1,600,000
	x Selling expenses percentage (from above)							13%
	Selling expenses							$ 208,000
	General expenses (including doubtful accounts):
	Sales (dollar amount from above)							$ 1,600,000
	x General expenses as a percentage of sales							15%		$ 240,000
	Sales (dollar amount from above)							$ 1,600,000
	x Doubtful accounts as a percentage of sales							2%		32,000
	Total general expenses									$ 272,000
	Earnings per share:
	Income before extraordinary items							$ 112,000
	Divided by shares of common stock						/	130,000
	Income from operations per share							$ 0.86
	Extraordinary gain (net of income taxes)							$ 21,000
	Divided by shares of common stock						/	130,000
	Extraordinary gain per share							$ 0.16
	CARIBOU INC.
	Income Statement
	For the Year Ended December 31, 2015
	Sales									1,600,000
	Cost of goods sold:
		Beginning inventory						$ 136,000
		Net purchases						919,200
		Cost of goods available for sale						$ 1,055,200
		Less: Ending inventory						95,200
		Cost of goods sold								960,000
	Gross profit on sales									$ 640,000
	Operating expenses
		Selling expenses						$ 208,000
		General expenses (including doubtful accounts)						272,000		480,000
	Income before income taxes and extraordinary items									$ 160,000
	Income taxes									48,000
	Income before extraordinary items									$ 112,000
	Extraordinary gain (net of income taxes of $9,000)									$ 21,000
	Net income									$ 133,000
	Earnings per share:
		Income before extraordinary items								$ 0.86
		Extraordinary gain								0.16
		Net income								$ 1.02