Concept Introduction:
Financial statements: Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement,
Balance Sheet : The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.
Income Statement:
Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.
Requirement-a:
To Calculate:
The amount of Apple's Gross profit for each year and evaluate the change in Gross profit % of sales
Answer to Problem 2.26P
The amount of Apple's Gross profit for each year is as follows:
| Apple Inc | ||
| $ in Millions | Year 2014 | Year 2013 |
| Gross Profit | $70,537 | $64,304 |
There is no significant change in the Gross profit as % of sales as compared with the year 2013.
Explanation of Solution
The amount of Apple's Gross profit for each year is calculated as follows:
| Apple Inc | ||
| $ in Millions | Year 2014 | Year 2013 |
| | | |
| Net Sales (A) | $ 182,795 | $ 170,910 |
| Cost of Goods Sold (B) | $ 112,258 | $ 106,606 |
| Gross Profit (C) | $70,537 | $64,304 |
| Gross Profit % (C/A) | 38.59% | 37.62% |
There is no significant change in the Gross profit as % of sales as compared with the year 2013.
Concept Introduction:
Financial statements: Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner's equity and Cash flows statements.
Balance Sheet : The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.
Income Statement:
Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.
Requirement-b:
To Calculate:
The amount of Apple's Operating Income for each year and evaluate the change in Operating Income as % of sales
Answer to Problem 2.26P
The amount of Apple's Operating Income for each year is as follows:
| Apple Inc | ||
| $ in Millions | Year 2014 | Year 2013 |
| | | |
| Operating Income | $52,503 | $48,999 |
There is no significant change in the Operating Income as % of sales as compared with the year 2013.
Explanation of Solution
The amount of Apple's Operating Income for each year is calculated as follows:
| Apple Inc | ||
| $ in Millions | Year 2014 | Year 2013 |
| | | |
| Net Sales (A) | $ 182,795 | $ 170,910 |
| Cost of Goods Sold (B) | $ 112,258 | $ 106,606 |
| Gross Profit (C) | $70,537 | $64,304 |
| Research and Development expenses (D) | $ 6,041 | $ 4,475 |
| Selling, General, and Administrative expenses (E) | $11,993 | $10,830 |
| Operating Income (F) =(C-D-E) | $52,503 | $48,999 |
| Operating Income as% of sales (F/A) | 29% | 29% |
There is no significant change in the Operating Income as % of sales as compared with the year 2013.
Concept Introduction:
Financial statements: Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner's equity and Cash flows statements.
Balance Sheet : The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.
Income Statement:
Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.
Requirement-c:
To Calculate:
The other missing amounts for each year
Answer to Problem 2.26P
The other missing amounts for each year are as follows:
| Apple Inc | ||
| $ in Millions | Year 2014 | Year 2013 |
| Other income, Net (G) | $26,966 | |
| Provision for Income Taxes (I) | $ 13,118 | |
Explanation of Solution
The other missing amounts for each year are as calculated as follows:
| Apple Inc | ||
| $ in Millions | Year 2014 | Year 2013 |
| Operating Income (F) | $52,503 | $ 48,999 |
| Other income, Net (G) | $26,966 | $ 1,156 |
| | (F-J+I) | |
| Provision for Income Taxes (I) | $13,973 | $ 13,118 |
| | | (F+G-J) |
| Net Income (J) | $39,510 | $ 37,037 |
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Chapter 2 Solutions
Accounting: What the Numbers Mean
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