Chapter 2, Problem 2.26P

To determine

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-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.

To determine

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.

To determine

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