Chapter 5, Problem 5.9BE

To determine

Net sales: Net sales refer to that amount of sales, which is computed by deducting sales returns and allowances and sales discounts from the total sales of the Company.

Gross Profit: Gross profit is that profit which is computed by deducting Cost of goods sold from the net sales (Sales after deducting Sales Return and allowances, Sales Discounts).

Income from operations: Income from operations refers to that income which is the result of deducting operating expenses from the gross profit of the company. It is calculated in the one of the steps of the multi-step income statement

Gross Profit Rate: It is the financial ratio that evaluates the money left out of the total revenues after deducting the cost of goods sold. Thus, it shows the relationship between the gross profit on sales and net sales.

(a) Net sales, (b) Gross profit, (c) Income from operations, (d) Gross profit rate of the A Company.