25 - M6-1 a. Airline tickets sold by an airline on a credit...

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Unformatted text preview: M6-1 a. Airline tickets sold by an airline on a credit card b. Computed sold by mail order company on a credit card c. Sale of inventory to a business customer on open account M6-2 (.02*2,000) $2000 - 40 1,960 E6-3 Sales Revenue Less: Sales Returns Less: Sales Discounts Less: Credit Card Discounts Net Sales $11,400 600 162 8 $10,630 E6-7 Slate Incorporated Income Statement For the Year Ended December 31, 2007 Gross Sales Less Sales Returns Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Administrative Selling Bad Debt Total Operating Expenses Income from Operations Income Tax Net Income $252,000 7,000 245,000 147,000 98,000 19,000 40,200 800 60,000 38,000 11,400 $26,600 Earnings Per Share [26,000 / 5,000shares]$5,32 Gross Profit Margin = net sales revenue – cost of goods sold = $245,000 - $147,000 = $98,000 Gross Profit Percentage Ratio = gpm / net sales revenue = $98,000 / $245,000 = 40% completion of flight shipment shipment Gross profit margin is the difference between the sales price and the cost of these sales. The ratio is the amount of net sales that was profit during the period. 40% means that 40 cents of each dollar earned went towards gross profit. E6-9 Bad Debt Expense (-SE) Allowance for Debt (-A) 3,600 3,600 Allowance for Doubtful Account (+A) Accounts Receivable (-A) 300 300 E6-12 Aged Accounts Receivable Estimated % Not Yet Due $12,000 x 2% Up to 120 Days 5,000 x 10% Over 120 Days 3,000 x 30% Estimated Balance in Allowance Current Balance in Allowance Bad Debt Expense for the Year E6-15 Bad Debt Expense (-SE) Allowance for Accounts (-A) Allowance for Accounts (+A) Accounts Receivable (-A) = = = Estimated Amount $240 500 900 1,640 300 $1,340 23 23 48 48 It would have no effect because both the account Accounts Receivable and the account Allowance for Accounts would decline by 10million Euro. No net values would be affected. ...
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This note was uploaded on 05/07/2008 for the course H ADM 121 taught by Professor Ddittman during the Spring '07 term at Cornell.

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25 - M6-1 a. Airline tickets sold by an airline on a credit...

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