Financial Accounting
9th Edition
ISBN: 9781259222139
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 5, Problem 5.5P
Preparing a Classified (Multiple-Step) Income Statement and Interpreting the Gross Profit
LO5-3 Percentage
Aeropostale. Inc., is a mall-based specialty- retailer of casual apparel and accessories. The company concept is to provide the customer with a focused selection of high-quality, active-oriented fashions at compelling values. The items reported on its income statement for a recent year (ended March 31) axe presented here (dollars in thousands) m alphabetical order
| Cost of goods sold | $1,733,916 |
| Interest expense | 417 |
| Net revenue | 2,342,260 |
| Other selling, general, and administrative expenses | 494,829 |
| Provision for income taxes | 43,583 |
| Weighted average shares outstanding | 81,208 |
Required:
Prepare a classified (multiple-step) consolidated income statement (showing gross profit, operating income, and income before income taxes). Include a presentation of basic earnings per share. What is the gross profit percentage? Explain its meaning.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Preparing an income statement and calculating unit cost for a merchandising company
Dillon Young owns Dillon’s Pets, a small retail shop selling pet supplies. On December 31, 2018, the accounting records for Dillon’s Pets showed the following:
Requirements
Prepare an income statement for Dillon’s Pets for the year ended December 31, 2018.
Dillon’s Pets sold 5,550 units. Determine the unit cost of the merchandise sold, rounded to the nearest cent.
1.
OBJECTIVES:
1. Prepare Statement of Comprehensive Income of a Merchandising Business Using a Multi-Step Approach
II.
2. Prepare a multi-step Statement of Comprehensive Income for the following accounts taken from Tin's Ready
to Wear Companyfor the period ended of December 31, 2019
Net Sales Php 75,000.00,
Cost of Sales Php 30,000.00,
General and Administrative Expenses Php12,000.00
Selling Expenses Php25,000.00
(Please refer to the 2nd picture for more information.)
Determining gross profit
During the current year, merchandise is sold for $8,780,000. The cost of the goods sold is $5,531,400. This information has been collected in the Microsoft
Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
Open spreadsheet
a. What is the amount of the gross profit? Round your answer to the nearest dollar.
b. Compute the gross profit percentage (gross profit divided by sales). Round your answer to the nearest whole number.
C. Will the income statement always report a operating incomne?
Yes
No
Previous
earch
542 PM
5/3/2021
Chapter 5 Solutions
Financial Accounting
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Explain what a material amount is.Ch. 5 - What basis of accounting (cash or accrual) does...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - For property, plant, and equipment, as reported on...
Ch. 5 - Briefly explain the major classifications of...Ch. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 14QCh. 5 - If average total assets increase, but net income,...Ch. 5 - Prob. 2MCQCh. 5 - Prob. 3MCQCh. 5 - Prob. 4MCQCh. 5 - Prob. 5MCQCh. 5 - Prob. 6MCQCh. 5 - Prob. 7MCQCh. 5 - Prob. 8MCQCh. 5 - Prob. 9MCQCh. 5 - Prob. 10MCQCh. 5 - Prob. 5.1MECh. 5 - Prob. 5.2MECh. 5 - Prob. 5.3MECh. 5 - Prob. 5.4MECh. 5 - Determining Financial Statement Effects of Sales...Ch. 5 - Prob. 5.6MECh. 5 - Prob. 5.7MECh. 5 - Matching Players in the Accounting Communication...Ch. 5 - Prob. 5.2ECh. 5 - Finding Financial Information: Matching...Ch. 5 - Prob. 5.4ECh. 5 - Preparing a Classified Balance Sheet Campbell Soup...Ch. 5 - Prob. 5.6ECh. 5 - Preparing a Classified (Multiple-Step) Income...Ch. 5 - Prob. 5.8ECh. 5 - Prob. 5.9ECh. 5 - Prob. 5.10ECh. 5 - Prob. 5.11ECh. 5 - Stock Issuances and the Statement of Stockholders...Ch. 5 - Prob. 5.13ECh. 5 - Prob. 5.14ECh. 5 - Prob. 5.15ECh. 5 - Prob. 5.16ECh. 5 - Prob. 5.17ECh. 5 - Prob. 5.18ECh. 5 - Prob. 5.19ECh. 5 - Matching Transactions with Concepts Following are...Ch. 5 - Matching Definitions with Balance Sheet-Related...Ch. 5 - Prob. 5.3PCh. 5 - Prob. 5.4PCh. 5 - Preparing a Classified (Multiple-Step) Income...Ch. 5 - Prob. 5.6PCh. 5 - Determining and Interpreting the Effects of...Ch. 5 - Determining the Effects of Transactions on Ratios...Ch. 5 - Prob. 5.9PCh. 5 - Prob. 5.1APCh. 5 - Preparing a Statement of Stockholders' Equity...Ch. 5 - Prob. 5.3APCh. 5 - Prob. 5.4APCh. 5 - Evaluating the Impact of Transactions on Statement...Ch. 5 - Prob. 5.2CONCh. 5 - Finding Financial Information Refer to the...Ch. 5 - Finding Financial Information Refer to the...Ch. 5 - Prob. 5.3CPCh. 5 - Prob. 5.4CPCh. 5 - Prob. 5.5CPCh. 5 - Prob. 5.6CPCh. 5 - Prob. 5.7CP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Given the following data, what is the gross profit as determined under the FIFO method if ZYZ's Hair Supplies sold 100 bottles of shampoo for $19 per bottle? Number of Units Information Unit Cost Beginning Inventory on 1/1 50 $6 Inventory Purchases on 1/5 80 $10 Fill in the blank with your calculated number. DO NOT include commas, $ signs, period, decimal points, etc., just enter the raw number. Webcourses will add commas to your answer automatically. For example, if you calculated the answer to be $24,123, you would only input: 24123 ASUS f4 f5 E3 f6 X f7 f9 f10 f11 & 4 5 7 8 96 远 图 %24arrow_forwardRequired information [The following information applies to the questions displayed below.] Trends by Tabitha sells high-end leather purses. The company has the following inventory transactions for the year. Date Units Unit Cost, Total Cost Transactions Beginning inventory 11 $410 $4,510 January 11 April 9 Purchase 21 430 9,030 October 4 Purchase 17 460 7,820 49 $21,360 January 1 to December 31 Sales 43 2. Using LIFO, calculate ending inventory and cost of goods sold. Ending inventory Cost of goods soldarrow_forwardRequired information [The following information applies to the questions displayed below.] Vitamix reports the following information for its year ended December 31: Cash sales Sales on credit General and administrative expenses Sales returns cost of goods sold Sales discounts Selling expenses Use the above information to prepare the gross profit section of a multiple-step income statement. VITAMIX $ 88,000 118,000 31,000 13,800 87,000 4,800 52,000 Income Statement For Year Ended December 31 $ 0 0 0arrow_forward
- Inferring Transactions from Financial Statements The GAP is a global clothing retailer for men, women, children, and babies. The following information is taken from The Gap's fiscal 2015 annual report. Selected Balance Sheet Data ($ millions) 2015 2014 Inventories $1,845 $1,917 Accounts Payable 1,084 1,201 a. The Gap purchased inventories totaling $9,938 million during fiscal 2015. Use the financial statement effects template to record cost of goods sold for The Gap's fiscal year ended 2015. (Assume accounts payable is used only for recording purchases of inventories and all inventories are purchased on credit.) b. What amount did the company pay to suppliers during the year? Record this with the financial statement effects template. Use negative signs with answers, if appropriate. Transaction a. Recognize cost of goods sold. b. Cash paid to suppliers. Cash Asset + Noncash Assets Balance Sheet Liabilities Contrib. Capital Earned Capital Revenues - Income Statement Expenses = Net incomearrow_forwardComplete the following data taken from the condensed income statements for merchandising Companies A, B, and C. Company A Company B Company C Net income $345 $190 Sales 850 530 Gross profit 405 340 70 Operating expenses 630 315 Cost of goods soldarrow_forwardMetlock Company sells discounted shoes to the fashion-oriented consumer. The Calculate Metlock Company's cost of goods sold, gross margin, and ending inventory using: inventory for the month of March: March 1 7 8 15 20 25 27 Beginning inventory Purchase Purchase Sale Sale Purchase Sale 2,580 units 860 units 1,290 units 3,010 units 602 units 430 units 1,032 units Cost $76,110 34,400 64,500 12,814 Sales $270,900 45,150 61,920 i. FIFO ii. Weighted-average (Round calculations for cost per unit to 2 decimal places, e.g. 10.52 and final answers to 0 decimal places, e.g. 61,052.) i. ii. FIFO Weighted- average $ LA Cost of Goods Sold 170710 171828 LA $ LA Gross Margin 207260 206142 LA Ending Inventory 17114 19092arrow_forward
- Need help filling in the following blank information. Thank you!arrow_forwardSelected data on inventory, purchases, and sales for Celebrity Tan Co. and Ranchworks Co. are as follows: Retail Celebrity Tan Co. Inventory, August 1 Transactions during August: Purchases (net) Sales Ranchworks Co. Inventory, March 1 Transactions during March through November: Purchases (net) Sales Estimated gross profit rate Required: Celebrity Tan Co. Estimated Cost of Inventory August 31 Ratio Line Item Description Inventory, August 1✔ ✔ Ratio of cost to retail price: Feedback ►Check My Work 1. Determine the estimated cost of the inventory of Celebrity Tan Co. on August 31 by the retail method, presenting details of the computations. For those boxes in which you must enter subtracted or negative numbers use a minus sign. % Ranchworks Co. Estimated Cost of Inventory November 30 Line Item Description Cost Cost Cost $300,000 $575,000 Cost 2,021,900 3,170,000 3,250,000 $880,000 9,500,000 15,800,000 38% 2a. Estimate the cost of the inventory of Ranchworks Co. on November 30 by the gross…arrow_forwardplease help me and solve this with working , explanation ,formula thanksarrow_forward
- How do I solve this?arrow_forwardPlease help me on this one!arrow_forwardRequired information [The following information applies to the questions displayed below.] Trends by Taisha sells high-end leather purses. The company has the following inventory transactions for the year. Date January 1 April 9 Transactions Beginning inventory Purchase October 4 Purchase January 1 to December 31 Sales Required: 1. Using FIFO, calculate ending inventory and cost of goods sold. Ending inventory Cost of goods sold Units 19 11 11 41 33 Unit Cost $310 330 360 Total Cost $5,890 3,630 3,960 $13,480arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License