Question

I have the solution.. I just do not know how they came up with some of the answers. e.g. sales return and allowande. Exercise 5-11

Calculating income statement components L01,5

Referring to Exhibit 5.15 calculate the missing amounts (round to two decimal places).

Company A Company B

2020 2019 2020 2019

Sales     $263,000.00 $187,000.00 ? 114200.00 $48,500.00

Sales Discount $2,630.00 ? 1350.00 $1,200.00 $570.00

Sales Return and Allowance ? 51570 $16,700.00 $6,200.00 ? 2430.00

Net Sales ? 208800.00 $168,950.00 ? 106800.00 $45,500.00

Cost of Goods Sold $157,100.00 ? 106450 $57,700.00 ? 23400.00

Gross Profit from Sales $51,700.00 ? 62500.00 $49,100.00 $22,100.00

Selling Expense $18,620.00 $19,700.00 $25,700.00 ? 9700.00

Administrative Expenses $26,300.00 ? 27700.00 $30,400.00 $9,700.00

Total Operating Expenses ? 44920.00 $47,400.00 ? 56100.00 ? 0

Profit (Loss) ? 6780.00 $15,100.00 ? (7000) $2,700.00

Gross Profit Ration ? 24.76 ? 36.99 ? 45.67 ? 48.57

Solve for ?

Answer 1

		Company	A	Company	B
		2020	2019	2020	2019
	Sales	2,63,000	1,87,000	114,200	48,500
	Less :Sales Discount	2,630	1,350	1,200	570
	Less :Sales return & Allowance	51,570	16,700	6,200	2,430
	Net sales	208,800	1,68,950	106,800	45,500
	Less :Cost of goods Sold	157,100	106,450	57,700	23,400
	Gross profit from sales	51,700	62,500	49,100	22,100
	Selling Expense	18,620	19,700	25,700	9,700
	Administrative expenses	26,300	27,700	30,400	9,700
	Less:Total operating expenses	44,920	47,400	56,100	19,400
	Profit (loss)	6,780	15,100	-7,000	2,700
	Gross profit ratio	24.76%	36.99%	45.97%	48.57%

Working
Company A- 2020
Net sales ( Cost of goods Sold + Gross profit from sales )	208,800	( 157,100 + 51,700 )
Sales return & Allowance ( Sales - sales discount - net sales )	51,570	( 263,000 - 2,630 - 208,800 )
Total operating expenses ( selling + adminstrative )	44,920	(18,620 + 26,300 )
Profit (loss) ( Gross profit from sales - Total operating expense )	6,780	(51,700 - 44,920 )
Gross profit ratio ( gross profit from sales / Net sales )	24.76%	(51,700 / 208,800 )
Company A- 2019
Sales discount ( Sales - Sales return & allowances - net sales )	1,350	(187,000 - 16,700 - 106,450 )
Administrative expense ( Total operating expenses - selling expense )	27,700	(47,400 - 19,700 )
Gross profit from sales ( Profit + total operating expenses )	62,500	( 15,100 + 47,400 )
Cost of goods sold ( Net Sales - gross profit from sales )	106,450	(168,950 - 62,500 )
Gross profit ratio ( gross profit from sales / Net sales )	36.99%	(62,500 / 168,950 )
Company B- 2020
Total operating expenses ( selling + adminstrative )	56,100	(25,700 + 30,400 )
Net sales ( Cost of goods Sold + Gross profit from sales )	106,800	(57,700 + 49,100 )
Sales ( Net sales + sales discount + sales return & allowances )	114,200	(106,800 + 1,200 + 6,200 )
Profit (loss) ( Gross profit from sales - Total operating expense )	-7,000	(49,100 - 56,100 )
Gross profit ratio ( gross profit from sales / Net sales )	45.97%	(49,100 / 106,800 )
Company B- 2019
Sales return & Allowance ( Sales - sales discount - net sales )	2,430	(48,500 -570 - 45,500 )
Cost of goods sold ( Net sales - Gross profit from sales )	23,400	(45,500 -22,100 )
Total operating expenses ( Gross profit from sales - profit)	19,400	(22,100 -2,700 )
Selling expense ( Total operating expenses - administrative expenses )	9,700	( 19,400 - 9,700 )
Gross profit ratio ( gross profit from sales / Net sales )	48.57%	(22,100 / 45,500 )