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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

As the accounting manager of Spring Creek Plastics, Inc., you have been asked to calculate the following financial ratios for the company's 2015 annual report. Use the balance sheet and the income statement on page 528 for Spring Creek.

Spring Creek Plastics, Inc.

Balance Sheet As of December 31,2015

Assets
Cash $250,000
Accounts Receivable 325,400
Merchandise Inventory 416,800
Marketable Securities 88,700
Supplies 12,100
Total Current Assets $1,093,000
Land and Building 1,147,000
Fixtures and Equipment 868,200
Total Property. Plant, and Equipment 2,015.200
Total Assets $3,108,200
Liabilities and Owner's Equity
Accounts Payable $286,500
Notes Payable (6-month) 153,200
Total Current Liabilities $439,700
Mortgage Payable 325,700
Notes Payable (4-year) 413,100
Total Long-Term Liabilities 738,800
Total Liabilities 1,178,500
Owner's Equity 1,929,700
Total Liabilities and Owner's Equity $3,108,200

Spring Creek Plastics, Inc. Income Statement, 2015

Net Sales $1,695,900
Merchandise Inventory. Jan. 1 $767,800
Net Purchases 314,900
Freight In 33.100
Goods Available for Sale 1,115,800
Merchandise Inventory. Dec. 31 239,300
Cost of Goods Sold 876,500
Gross Margin 819,400
Total Operating Expenses 702,300
Income before Taxes 117,100
Taxes 35,200
Net Income $81,900

Gross profit margin:

To determine

To calculate: The gross profit margin of Spring Creek Plastics, Inc., as per the given balance sheet and income statement for 2015.

Spring Creek Plastic, Inc.

Balance sheet

As on December 31 2015

Assets

Amount (in $)

Amount (in $)

Cash

$250,000

Account Recoverable

$325,400

Merchandise inventory

$416,800

Marketable securities

$88,700

Supplies

$12,100

Total current assets

$1,093,000

Land and building

$147,000

Fixture and equipment

$868,200

Total Property, Plant and Equipment

$2,015,200

Total Assets

$3,108,200

Liabilities and Owner’s Equity

Account payable

$286,500

Notes Payable (6-month)

$153,200

Total current liabilities

$439,700

Mortgage payable

$325,700

Notes payable (4-year)

$413,100

Total long term liabilities

$738,800

Total liabilities

$1,178,500

Owner’s Equity

$1,929,700

Total liabilities and owner’ equity

$3,108,200

Spring Creek Plastic, Inc.

Income statement,2015

Particular

Amount (in $)

Amount (in $)

Net sales

$1,695,900

Merchandises inventory

$767,800

Net purchase

$314,900

Freight in

$33,100

Good available for sale

$1,115,800

Merchandise inventory, Dec.31

$239,300

Cost of goods sold

$876,500

Gross margin

$819,400

Total operating expenses

$702,300

Income before taxes

$117,100

Taxes

$35,200

Net income

$81,900

Explanation

Given Information:

The provided balance sheet:

Spring Creek Plastic, Inc.

Balance sheet

As on December 31 2015

Assets

Amount (in $)

Amount (in $)

Cash

$250,000

Account Recoverable

$325,400

Merchandise inventory

$416,800

Marketable securities

$88,700

Supplies

$12,100

Total current assets

$1,093,000

Land and building

$147,000

Fixture and equipment

$868,200

Total Property, Plant and Equipment

$2,015,200

Total Assets

$3,108,200

Liabilities and Owner’s Equity

Account payable

$286,500

Notes Payable (6-month)

$153,200

Total current liabilities

$439,700

Mortgage payable

$325,700

Notes payable (4-year)

$413,100

Total long term liabilities

$738,800

Total liabilities

$1,178,500

Owner’s Equity

$1,929,700

Total liabilities and owner’ equity

$3,108,200

Spring Creek Plastic, Inc.

Income statement,2015

Particular

Amount (in $)

Amount (in $)

Net sales

$1,695,900

Merchandises inventory

$767,800

Net purchase

$314,900

Freight in

$33,100

Good available for sale

$1,115,800

Merchandise inventory, Dec...

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