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 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'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.

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