In the income statements of three companies. Cost of Goods Operating Nonoperating Income Tax Company Henry Net Sales Sold Expenses Expenses Expense $42,000 $10,500 $5,500 $2,500 $2,500 Grace 45,000 29,700 16,600 7,500 0 James 50,000 29,000 3,500 0 3,500 Required: 1. For each company, calculate (a) gross profit, (b) operating income, (c) income before income taxes, and (d) net income. 2-a. For each company, calculate the gross profit ratio. 2-b. Which company has the most favorable ratio? Complete this question by entering your answers in the tabs below. Req 1 Req 2a Req 2b Which company has the most favorable ratio? Which company has the most favorable ratio? < Req 2a Req 2b >
In the income statements of three companies. Cost of Goods Operating Nonoperating Income Tax Company Henry Net Sales Sold Expenses Expenses Expense $42,000 $10,500 $5,500 $2,500 $2,500 Grace 45,000 29,700 16,600 7,500 0 James 50,000 29,000 3,500 0 3,500 Required: 1. For each company, calculate (a) gross profit, (b) operating income, (c) income before income taxes, and (d) net income. 2-a. For each company, calculate the gross profit ratio. 2-b. Which company has the most favorable ratio? Complete this question by entering your answers in the tabs below. Req 1 Req 2a Req 2b Which company has the most favorable ratio? Which company has the most favorable ratio? < Req 2a Req 2b >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Domestic
Transcribed Image Text:Below are amounts found in the income statements of three companies.
Cost of Goods Operating
Sold
Expenses
Nonoperating
Expenses
Income Tax
Expense
$10,500
$5,500
$2,500
$2,500
45,000
29,700
16,600
7,500
0
50,000
29,000
3,500
0
3,500
Company
Henry
Net Sales
$42,000
Grace
James
Required:
1. For each company, calculate (a) gross profit, (b) operating income, (c) income before income taxes, and (d) net income.
2-a. For each company, calculate the gross profit ratio.
2-b. Which company has the most favorable ratio?
Complete this question by entering your answers in the tabs below.
Req 1
Req 2a
Req 2b
Which company has the most favorable ratio?
Which company has the most favorable ratio?
< Req 2a
Req 2b >
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Step 1: Introduce to income statement
VIEWStep 2: Working for gross profit and gross profit ratio of each company
VIEWStep 3: Working for operating income for each company
VIEWStep 4: Working for income before income tax for each company
VIEWStep 5: Working for net income for each company
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