# 22 an adjusted trial balance of woods company for the year 2015 is given below prepa 4307072

22) An adjusted trial balance of Woods Company for the year 2015 is given below. Prepare a single-step income statement for the company.

 Cash \$15,000 Accounts Receivable 42,000 Merchandise Inventory 60,000 Supplies 15,000 Land 300,000 Accounts Payable \$3,000 Notes Payable 25,000 Smith, Capital 326,000 Smith, Withdrawals 3,000 Sales Revenues 480,000 Sales Returns and Allowances 6,000 Sales Discounts 9,000 Cost of Goods Sold 240,000 Salaries Expense 15,000 Utility Expense 69,000 Rent Expense 54,000 Interest Expense 6,000 Totals \$834,000 \$834,000

Learning Objective 5-6

1) The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold.

2) A small increase in the gross profit percentage may indicate an important rise in income.

3) Which of the following is the correct formula for calculating gross profit percentage?

A) Net profit ÷ Net sales revenue

B) Gross profit ÷ Net sales revenue

C) Net sales revenue ÷ Net profit

D) Net sales revenue ÷ Gross profit

4) The gross profit percentage is one of the most important measures of:

A) profitability.

B) liquidity.

C) solvency.

D) marketability.

5) Which of the following is true of the gross profit percentage?

A) Gross profit percentage is the same for companies in all industries.

B) Gross profit percentage is used to measure the solvency of a company.

C) The gross profit percentage is one of the most carefully watched measures of profitability.

D) Service companies are required to calculate gross profit while preparing the Income Statement.

6) A company made net sales revenue of \$540,000 and cost of goods sold totaled \$324,000. Calculate its gross profit percentage.

A) 40.00%.

B) 66.67%.

C) 100.00%.

D) 300.00%.

7) Gilbert Inc. generated sales revenues of \$1,000,000 in the year 2015. Its cost of goods sold amounted to \$400,000. Calculate Gilbert&#39;s gross profit percentage.

A) 40%

B) 60%

C) 167%

D) 250%

Learning Objective 5-7

1) Under the periodic inventory system, purchases, purchase discounts, and purchase returns and allowances are recorded in the Merchandise Inventory account as and when they occur.