Concept explainers
Compute the missing values of the income statement under different cases.
Answer to Problem 5.11E
Preparation of income statement of Company BGT and computation of missing amounts as given below:
Company BGT | |||||
Statement of Income | |||||
For the year ended | |||||
Particulars | Case A | Case B | Case C | Case D | Case E |
Sales revenue | $770 | (4) $1,200 | (7) $400 | $600 | $1,050 |
Less: Cost of Goods sold | (3) $300 | $320 | $125 | $250 | (12) $420 |
Gross margin | (2) $470 | $880 | (6) $275 | (9) $350 | $630 |
Less: Administrative expense | $200 | $120 | $80 | (10) $150 | $175 |
Less: Selling expense | $90 | $275 | $45 | $70 | (13)$85 |
Pretax income | (1) $180 | (5) $485 | $150 | $130 | $370 |
Less: Income tax expense | $65 | $210 | $60 | $45 | (14) $130 |
Net income | $115 | $275 | (8) $90 | (11) $85 | $240 |
Table (1)
Explanation of Solution
Financial statement: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements show the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of
Income statement: Income statement is a financial statement that shows the net income or net loss by deducting the expenses from the revenues and vice versa.
Working Note:
Determine the amount of pretax income.
Determine the amount of gross margin.
Determine the amount of cost of goods sold.
Determine the amount of sales revenue.
Determine the amount of pretax income.
Determine the amount of gross margin.
Determine the amount of sales revenue.
Determine the amount of net income.
Determine the amount of gross margin.
Determine the amount of administrative expense.
Determine the amount of net income.
Determine the amount of cost of goods sold.
Determine the amount of selling expense.
Determine the amount of income tax expense.
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Chapter 5 Solutions
CONNECT FINANCIAL ACCOUNTING >I<
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