Wolford Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2017, these accounts appeared in its adjusted trial balance.Accounts Payable $ 34,304Accounts Receivable 22,016Accumulated Depreciation—Equipment 87,040Cash 10,240Common Stock 44,800Cost of Goods Sold 786,304Freight-Out 7,936Equipment 200,960Depreciation Expense 17,280Dividends 15,360Gain on Disposal of Plant Assets 2,560Income Tax Expense 12,800Insurance Expense 11,520Interest Expense 6,400Inventory 33,536Notes Payable 55,680Prepaid Insurance 7,680Advertising Expense 42,880Rent Expense 43,520Retained Earnings 18,176Salaries and Wages Expense 149,760Sales Revenue 1,157,120Salaries and Wages Payable 7,680Sales Returns and Allowances 25,600Utilities Expense 13,568Additional data: Notes payable are due in 2021. Calculate the profit margin and the gross profit rate. (Round answers to 1 decimal place, e.g. 15.2%)Profit margin%Gross profit rate%The vice president of marketing and the director of human resources have developed a proposal whereby the company wouldcompensate the sales force on a strictly commission basis. Given the increased incentive, they expect net sales to increase by 15%.As a result, they estimate that gross profit will increase by $51,767 and expenses by $75,008. Compute the expected new netincome. Then, compute the revised profit margin and gross profit rate. (Ignore income tax effects.)Revised net incomeRevised profit margin (Round to 1 decimal place, e.g. 15.2%)Revised gross profit rate (Round to 1 decimal place, e.g. 15.2%)%24

Preparation of Income statement :- Particulars Amount Amount Sales revenue 1,157,120 Less:…

Answered: Wolford Department Store is located in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Wolford Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2017, these accounts appeared in its adjusted trial balance.

Accounts Payable		$ 34,304
Accounts Receivable		22,016
Accumulated Depreciation—Equipment		87,040
Cash		10,240
Common Stock		44,800
Cost of Goods Sold		786,304
Freight-Out		7,936
Equipment		200,960
Depreciation Expense		17,280
Dividends		15,360
Gain on Disposal of Plant Assets		2,560
Income Tax Expense		12,800
Insurance Expense		11,520
Interest Expense		6,400
Inventory		33,536
Notes Payable		55,680
Prepaid Insurance		7,680
Advertising Expense		42,880
Rent Expense		43,520
Retained Earnings		18,176
Salaries and Wages Expense		149,760
Sales Revenue		1,157,120
Salaries and Wages Payable		7,680
Sales Returns and Allowances		25,600
Utilities Expense		13,568

Additional data: Notes payable are due in 2021.

Calculate the profit margin and the gross profit rate. (Round answers to 1 decimal place, e.g. 15.2%)
Profit margin
%
Gross profit rate
%
The vice president of marketing and the director of human resources have developed a proposal whereby the company would
compensate the sales force on a strictly commission basis. Given the increased incentive, they expect net sales to increase by 15%.
As a result, they estimate that gross profit will increase by $51,767 and expenses by $75,008. Compute the expected new net
income. Then, compute the revised profit margin and gross profit rate. (Ignore income tax effects.)
Revised net income
Revised profit margin (Round to 1 decimal place, e.g. 15.2%)
Revised gross profit rate (Round to 1 decimal place, e.g. 15.2%)
%24

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