General accounting The following income statement was drawn from the records of Jordan Company, a merchandisingfirm:Sales revenue (5,500 units * $168)$924,000Cost of goods sold (5,500 units * $86)(473,000)Gross margin451,000Sales commissions (5% of sales)(46,200)Administrative salaries expense(85,000)Advertising expense(38,000)Depreciation expense(44,000)Shipping and handling expenses (5,500 units * $3) (16,500)Net incomeRequired:$221,300a. Reconstruct the income statement using the contribution margin format.b. Calculate the magnitude of operating leverage.c. Use the measure of operating leverage to determine the amount of net income Jordan will earnif sales increase by 10%.

Step 1: Define Operating LeverageThe cost accounting method used in the computation of the…

Answered: The following income statement was…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter5: Accounting For Retail Businesses

Section: Chapter Questions

Problem 41E: Cost of goods sold and related items The following data were extracted from the accounting records...

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The following information is available for Cooke Company for the current year: The gross margin is 40% of net sales. What is the cost of goods available for sale? a. 5840,000 b. 960,000 c. 1,200,000 d. 1,220,000
Cost of goods sold and related items The following data were extracted from the accounting records of Harkins Company for the year ended April 30, 20Y8: Estimated returns of current year sales 11,600 Inventory, May 1, 20Y7 380,000 Inventory, April 30, 20Y8 415,000 Purchases 3,800,000 Purchases returns and allowances 150,000 Purchases discounts 80,000 Sales 5,850,000 Freight in 16,600 a. Prepare the Cost of goods sold section of the income statement for the year ended April 30, 20Y8, using the periodic inventory system. b. Determine the gross profit to be reported on the income statement for the year ended April 30, 20Y8. c. Would gross profit be different if the perpetual inventory system was used instead of the periodic inventory system?
The following income statement was drawn from the records of Walton Company, a merchandising firm: WALTON COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (5,500 units x $168) Cost of goods sold (5,500 units * $89) Gross margin Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (5,500 units x $2) Net income Req A $924,000 (489,500) 434,500 (46,200) (80,000) (31,000) Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Walton will earn if sales increase by 10 percent. Complete this question by entering your answers in the tabs below. Less: Variable costs (44,000) (11,000) $222,300 Req B and C Reconstruct the income statement using the contribution margin format. WALTON COMPANY Income Statement For the Year Ended…
The following income statement was drawn from the records of Munoz, a merchandising firm: MUNOZ COMPANY Income Statement For the Year Ended December 31 Sales revenue (6,500 units x $164) Cost of goods sold (6,500 units x $82) Gross margin Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (6,500 units x $3) $1,066,000 (533,000) 533,000 (53,300) (83,000) (33,000) (41,000) (19,500) $ 303,200 Net income Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Munoz will earn if sales increase by 10 percent. Complete this question by entering your answers in the tabs below. Req A Req B and C Reconstruct the income statement using the contribution margin format. MUNOZ COMPANY Income Statement For the Year Ended December 31 Less: Variable costs Less: Fixed…
The following income statement was drawn from the records of Munoz, a merchandising firm: MUNOZ COMPANY Income Statement For the Year Ended December 31 Sales revenue (6,500 units x $164) Cost of goods sold (6,500 units x $82) Gross margin Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (6,500 units x $3) $1,066,000 (533,000) 533,000 (53,300) (83,000) (33,000) (41,000) (19,500) 8:02 Net income $303,200 nt Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net incoome Munoz will earn if sales increase by 10 percent. int Complete this question by entering your answers in the tabs below. Req A Req B and C Reconstruct the income statement using the contribution margin format. MUNOZ COMPANY Income Statement For the Year Ended December 31 Less: Variable costs…
The following Income statement was drawn from the records of Fanning Company, a merchandising firm: Sales revenue (7,000 units x $160) Cost of goods sold (7,000 units * $87) Gross margin Sales commissions (5% of sales) Administrative salaries expense Required For the Year Ended December 31, Year 1 Advertising expense Depreciation expense Shipping and handling expenses (7,000 units * $1) Net income FANNING COMPANY Income Statement Req A a. Reconstruct the Income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net Income Fanning will earn If sales Increase by 20 percent. Complete this question by entering your answers in the tabs below. Reg B and C FANNING COMPANY Income Statement For the Year Ended December 31, Year 1 Less: Variable costs Reconstruct the income statement using the contribution margin format. Less: Fixed costs $1,120,088 (609,000) 511,000 (56,000)…
The following Income statement was drawn from the records of Walton Company, a merchandising firm: sales revenue (7,500 units x $163) Cost of goods sold (7,500 units × $81) Gross margin Sales commissions (10% of sales) Administrative salaries expense Required Advertising expense Depreciation expense Shipping and handling expenses (7,500 units x $3) Net income For the Year Ended December 31, Year 1 WALTON COMPANY Income statement Req A a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net Income Walton will earn If sales increase by 10 percent. Complete this question by entering your answers in the tabs below. Req B and C Less: Fixed costs Less: Variable costs Reconstruct the income statement using the contribution margin format. WALTON COMPANY Income Statement For the Year Ended December 31, Year 1 S $1,222,500 (607,500) 615,000 (122,250)…
The following income statement was drawn from the records of Franklin Company, a merchandising firm: FRANKLIN COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (6,500 units × $168) Cost of goods sold (6,500 units × $86) Gross margin Sales commissions (5% of sales) Administrative salaries expense $1,092,000 (559,000) 533,000 (54,600) (82,000) (30,000) (44,000) (6,500) Advertising expense Depreciation expense Shipping and handling expenses (6,500 units × $1) Net income Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Franklin will earn if sales increase by 10 percent. $315,900
The following income statement was drawn from the records of Campbell, a merchandising firm: CAMPBELL COMPANY Income Statement For the Year Ended December 31 $ 742,500 Sales revenue (4,500 units x $165) Cost of goods sold (4,500 units x $83) Gross margin (373,500) Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (4,500 units x $3) 369,000 (37,125) (82,000) (31,000) (43,000) (13,500) Net income $ 162,375 Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Campbell will earn if sales increase by 20 percent.
The following income statement was drawn from the records of Adams Company, a merchandising firm: ADAMS COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (7,500 units x $167) Cost of goods sold (7,500 units x $82) Gross margin Sales commissions (5% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (7,500 units x $5) Net income Required $1,252,500 (615,000) 637,500 (62,625) (88,000) (40,000) (49,000) (37,500) $360,375 a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Adams will earn if sales increase by 20 per Complete this question by entering your answers in the tabs below. Req A Req B and C Reconstruct the income statement using the contribution margin format. ADAMS COMPANY Income Statement For the Year Ended December 31, Year 1
The following Income statement was drawn from the records of Campbell Company, a merchandising firm: CAMPBELL COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (7,000 units × $165) Cost of goods sold (7,000 units x $87) Gross margin Sales commissions (10% of sales) Administrative salaries expense Advertising expense Depreciation expense Shipping and handling expenses (7,000 units × $2) Net income Required Req A a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net Income Campbell will earn if sales Increase by 20 percent. Complete this question by entering your answers in the tabs below. Req B and C Less: Variable costs Less: Fixed costs Reconstruct the income statement using the contribution margin format. CAMPBELL COMPANY Income Statement For the Year Ended December 31, Year 1 $ $1,155,000 (609,000) 546,000 (115,500)…
The following income statement was drawn from the records of Walton, a merchandising firm: WALTON COMPANY Income Statement For the Year Ended December 31 Sales revenue (5,000 units × $166) $ 830,000 Cost of goods sold (5,000 units × $85) (425,000 ) Gross margin 405,000 Sales commissions (10% of sales) (83,000 ) Administrative salaries expense (87,000 ) Advertising expense (33,000 ) Depreciation expense (45,000 ) Shipping and handling expenses (5,000 units × $1) (5,000 ) Net income $ 152,000 Required Reconstruct the income statement using the contribution margin format. Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Walton will earn if sales increase by 10 percent.

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