Copyright © 2008, The McGraw-Hill Companies, Inc.
Exercises 12.1 495- Calculate the gross profi t and net income of the company whose incomplete income statement is given below:
Latchman’s Pharmacy
Second Quarter 2007 Income StatementSales $255,606
Cost of goods sold
Prescription medications $74,000
OTC medicines $8,509
Health and beauty $18,439
Other/sundries $22,001
To tal cost of goods sold $122,949
Gross profi t
To tal expenses $115,063
Net income- Suppose your company had 2006 net sales totaling $657,000. The cost of goods sold was $320,000. Expenses
included $119,750 for wages and benefi ts, $58,000 for rent, $9,200 for utilities, $8,500 in depreciation, and $3,750
of other expenses. Calculate your company’s gross profi t and net income for 2006.
B. More Detailed Income Statements- A bike shop had gross sales of $513,400 in 2007, $14,900 in returns, and gave $5,380 in discounts for early payment.
Calculate the shop’s net sales for 2007. - A candy factory had gross sales of $2,956,720 in 2005. There were $396,000 in returns, and the company gave
$18,430 in early payment discounts. Calculate the factory’s 2005 net sales. - A bike shop had $186,500 worth of inventory at the start of 2007 and $164,850 worth at the end of the year. They
made purchases of $173,145 during the year. Calculate their cost of goods sold for 2007. - A candy factory had $75,025 in inventory at the start of 2005 and $89,710 at the end of the year. They made
purchases of $784,325 during the year. Determine their cost of goods sold for the year. - Calculate the 2007 gross profi t for the bike shop from Exercises 6 and 8.
- Find the 2005 gross profi t for the candy factory from Exercises 7 and 9.
- Ludd and Simms Electronics had net sales of $935,275 last year, and their cost of goods sold was $542,800. Expenses
for the year consisted of $225,000 for salaries and benefi ts, $65,000 for depreciation, $98,355 for rent and utilities,
a $20,000 provision for taxes, and $37,200 of interest expenses. Calculate the company’s (a) gross profi t, (b) total
operating expenses, (c) EBIT, and (d) net income for the year. - Tokamak Home Generators had net sales of $6,450,036 last year. The company’s cost of goods sold was $2,890,403.
Expenses for the year included $803,419 for salaries and benefi ts, $816,400 for depreciation, $197,500 for rent and