Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 6, Problem 6.17ME
To determine
Whether the change in gross profit was caused by an increase in gross profit per sale, an increase in sales volume, or a combination of both.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Vertical analysis (common-size) percentages for Baker Company’s sales revenue, cost of goods sold, and expenses are as follows. Did Baker’s net income as a percent of sales increase, decrease, or remain unchanged over the 3-year period? Provide numerical support for your answer.
Vertical Analysis
2018
2017
2016
Sales revenue
100.0%
100.0%
100.0%
Cost of goods sold
60.0
63.9
65.0
Expenses
26.0
26.6
27.5
Give correct answer
I want to answer this question
Chapter 6 Solutions
Fundamentals of Financial Accounting
Ch. 6 - Prob. 1QCh. 6 - If a Chicago-based company ships goods on...Ch. 6 - Define goods available for sale. How does it...Ch. 6 - Define beginning inventory and ending inventory.Ch. 6 - Describe how transportation costs to obtain...Ch. 6 - What is the main distinction between perpetual and...Ch. 6 - Why is a physical count of inventory necessary in...Ch. 6 - What is the difference between FOB shipping point...Ch. 6 - Describe in words the journal entries that are...Ch. 6 - What is the distinction between Sales Returns and...
Ch. 6 - Prob. 11QCh. 6 - In response to the weak economy, your companys...Ch. 6 - Prob. 13QCh. 6 - Why are contra-revenue accounts used rather than...Ch. 6 - What is gross profit? How is the gross profit...Ch. 6 - Prob. 1MCCh. 6 - Prob. 2MCCh. 6 - Prob. 3MCCh. 6 - Prob. 4MCCh. 6 - Prob. 5MCCh. 6 - Prob. 6MCCh. 6 - Prob. 7MCCh. 6 - Prob. 8MCCh. 6 - Prob. 9MCCh. 6 - Prob. 10MCCh. 6 - Distinguishing among Operating Cycles Identify the...Ch. 6 - Calculating Shrinkage in a Perpetual Inventory...Ch. 6 - Prob. 6.3MECh. 6 - Inferring Purchases Using the Cost of Goods Sold...Ch. 6 - Evaluating Inventory Cost Components Assume...Ch. 6 - Prob. 6.6MECh. 6 - Recording Journal Entries for Purchases and Safes...Ch. 6 - Prob. 6.8MECh. 6 - Recording Journal Entries for Sales and Sales...Ch. 6 - Prob. 6.10MECh. 6 - Prob. 6.11MECh. 6 - Calculating Shrinkage and Gross Profit in a...Ch. 6 - Preparing a Multistep Income Statement Sellall...Ch. 6 - Prob. 6.14MECh. 6 - Computing and Interpreting the Gross Profit...Ch. 6 - Interpreting Changes in Gross Profit Percentage...Ch. 6 - Prob. 6.17MECh. 6 - Understanding Relationships among Gross Profit and...Ch. 6 - Relating Financial Statement Reporting to Type of...Ch. 6 - Prob. 6.2ECh. 6 - Identifying Shrinkage and Other Missing inventory...Ch. 6 - Prob. 6.4ECh. 6 - Prob. 6.5ECh. 6 - Inferring Missing Amounts Based on Income...Ch. 6 - Prob. 6.7ECh. 6 - Prob. 6.8ECh. 6 - Reporting Purchases, Purchase Discounts, and...Ch. 6 - Prob. 6.10ECh. 6 - Items Included in Inventory PC Mall, Inc., is a...Ch. 6 - Prob. 6.12ECh. 6 - Prob. 6.13ECh. 6 - Reporting Net Sales with Credit Sales and Sales...Ch. 6 - Prob. 6.15ECh. 6 - Prob. 6.16ECh. 6 - Prob. 6.17ECh. 6 - Determining the Effects of Credit Sales, Sales...Ch. 6 - Prob. 6.19ECh. 6 - Inferring Missing Amounts Based on Income...Ch. 6 - Prob. 6.21ECh. 6 - Prob. 6.22ECh. 6 - (Supplement 6A) Recording Purchases and Sales...Ch. 6 - Prob. 6.1CPCh. 6 - Prob. 6.2CPCh. 6 - Prob. 6.3CPCh. 6 - Prob. 6.4CPCh. 6 - (Supplement A) Recording Inventory Transactions...Ch. 6 - Prob. 6.1PACh. 6 - Reporting Purchase Transactions between Wholesale...Ch. 6 - Recording Sales with Discounts and Returns and...Ch. 6 - Prob. 6.4PACh. 6 - (Supplement A) Recording Inventory Transactions...Ch. 6 - Prob. 6.1PBCh. 6 - Reporting Purchase Transactions between Wholesale...Ch. 6 - Prob. 6.3PBCh. 6 - Prob. 6.4PBCh. 6 - (Supplement A) Recording Inventory Transactions...Ch. 6 - Accounting for Inventory Orders, Purchases, Sales,...Ch. 6 - Prob. 6.1SDCCh. 6 - Prob. 6.2SDCCh. 6 - Internet-Based Team Research: Examining an Annual...Ch. 6 - Evaluating the Results of Merchandising Operations...Ch. 6 - Prob. 6.6SDCCh. 6 - Prob. 6.1CC
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
- answer in text form please (without image)arrow_forwardSubject:arrow_forwardA. The following items were taken from the financial statements of Salley, Inc. over a three year period: Using the horizontal analysis and 2016 as the base year, compute the change in percentages for net sales, cost of goods sold, gross profit, operating expenses and net income. Explain whether the trends are favorable or unfavorable for each item. Item 2018 Net Sales 825,000 Cost of Goods Sold 630,000 Gross Profit 195,000 Operating Expenses 100,000 Net Income P 95,000 2017 P 740,000 580,000 160,000 80,000 P 80,000 2016 675,000 535,000 140,000 75,000 P 65,000arrow_forward
- Questions: Does a low return on sales indicate a weak company? (Y/N). Explain your answer. Do greater Net sales always result in greater net income? (Y/N) Why? Examine the financial information above and comment on the item that you find interesting.arrow_forwarddiscuss the results of the Company's Horizontal and Vertical Analysis from 2014-2018arrow_forwardAnalyze the financials for Wal-Mart and its competitor(s) in the online market in 2012 and 2016. What do you conclude from analyzing financial ratios about the companies strategies and Walmart's competitive advantage? Revenue Cost of goods sold Gross profit SG&A and other expenses Operating income Net income Total assets Total liabilities Total equity Total assets end Total assets beginning Total liabilities end Total liabilities beginning Total equity end Total equity beginning Cost of goods sold as % of sales Gross margin SG&A as % of sales Operating income margin Net profit margin Asset turnover ROA ROE Walmart 2012 in $ millions 443,854 335,127 108,727 85,265 23,462 15,699 186,931 113,021 73,910 193,406 180,455 117,241 108,800 76,165 71,655 75.5% 24.5% 19.2% 5.3% 3.5% 2.4 8.4% 21.2% Walmart 2016 in $ millions 478,614 360,984 117,630 97,041 20,589 14,694 201,536 116,762 84,774 199,581 203,490 115,970 117,553 83,611 85,937 75.4% 24.6% 20.3% 4.3% 3.1% 2.4 7.3% 17.3% Amazon 2012 in $…arrow_forward
- Use the following tables to answer the question: LOGIC COMPANY Income Statement For years ended December 31, 2016 and 2017 (values in $) 2016 2017 Gross sales 19,800 15,600 Sales returns and allowances 900 100 Net sales 18,900 15,500 COGS 11,800 8,800 Gross profit 7,100 6,700 Depreciation 780 640 Selling and administrative expenses 2,800 2,400 Research 630 540 Miscellaneous 440 340 Total operating expenses 4,650 3,920 Income before interest and taxes 2,450 2,780 Interest expense 640 540 Income before taxes 1,810 2,240 Provision for taxes 724 896 LOGIC COMPANY Balance Sheet For years ended December 31, 2016 and 2017 (values in $) 2016 2017 Current assets 12,300 9,400 Accounts receivable 16,900 12,900 Merchandise inventory 8,900 14,400 Prepaid expenses 24,400 10,400 Total current assets 62,500 47,100 Building (net) 14,900 11,400 Land 13,900 9,400 Total plant and equipment 28,800 20,800 Total assets 91,300 67,900 Accounts payable 13,400 7,400 Salaries payable 7,500 5,400 Total current…arrow_forwardCalculating Gross Profit and Inventory TurnoverThe following table presents, sales, revenue, cost of goods sold, and inventory for 3 companies: Samsung, HP & Apple.a. Compute the gross profit margin (GPM) for each of these companies for all 3 yearsb. Compute the inventory turnover ratio and the average inventory days outstanding for each company for the last two fiscal year using FIFO inventory costingc. What factors might determine the differences among these 3 companies’ ratios? ($millions) Fiscal year endingSamsung (Korean won) 12/31/2014 12//2013 12/31/2012Revenue 206,205,987 228,692,667 201,103,613COGS 128,278,800 137,696,309 126,651,931Inventory 17,317,504 19,134,868 17,747,413 HP (US Dollar) 10/31/2014 10/31/2013 10/31/2012Revenue (products only) 73,726…arrow_forwardQuestion 1 Indicate which one of the following would not appear on both a single-step income statement and a multiple-step income statement. Question 2 Bolton Company’s gross profit rate last year was 32.0% and this year it is 28.4%. Which of the following would not be a possible cause for this decline in the gross profit rate? Question 3 The amount of cost of good available for sale during the year depends on the amounts of Question 4 The Sales Returns and Allowances account does not provide information to management about Question 5 Stan’s Market recorded the following events involving a recent purchase of merchandise: As a result of these events, the company’s merchandise inventory Question 6 Gross profit equals the difference between sales and Question 7 A company using a perpetual inventory system that returns goods previously purchased on credit would Question 8 The collection of a $900 account beyond the 2 percent discount period will result in a Question 9 Expenses…arrow_forward
- Consider the following information for two companies in 2023: Company A Sales Cost of goods sold Average inventory $442,592 211,589 142,726 Company B $324,835 157,780 112,300 Based only on gross profit margin and days inventory outstanding, Enter 1 if Company A is more efficient with its inventory and more profitable selling it than Company B. Enter 2 if Company A is more efficient with its inventory but less profitable selling it than Company B. Enter 3 if Company A is less efficient with its inventory but more profitable selling it than Company B. Enter 4 if Company A is less efficient with its inventory and less profitable selling it than Company B.arrow_forwardSee image for question details.arrow_forwardWhat is the percent change in a trend analysis of income statement for the gross profit?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License