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Homework_6_solution

# Homework_6_solution - Homework Manager Assignment Solutions...

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Homework Manager Assignment Solutions E6–2. Sales revenue (\$1,000 + \$5,000 +\$3,000) ................................. \$9,000 Less: Sales returns and allowances (\$1,000 from T) ................ 1,000 Less: Sales discounts (\$5,000 collected from S x 3%) ............. 150 Less: Credit card discounts (\$1,000 from R x 2%) .................... 20 Net sales ..................................................................................... \$7,830 E6–6. Req. 1 WOLVERINE WORLD WIDE INC. Income Statement For the Year Ended Amount Percentage Sales of merchandise \$888,926 100.0% Cost of products sold 562,338 63.3% Gross profit 326,588 36.7% Selling and administrative expense 246,652 27.7% Income from operations 79,936 9.0% Other income (expense) Interest expense (5,474) 0.6% Other income 686 0.1% Pretax income 75,148 8.5% Income taxes 23,262 2.6% Net Income \$ 51,886 5.8% Earnings per share (\$51,886 ÷ 40,721 shares) \$1.27 Req. 2 Gross profit margin: \$888,926 – \$562,338 = \$326,588 . Gross profit percentage ratio: \$326,588 ÷ \$888,926 = .367 (or 36.7% ). Gross margin or gross profit in dollars is the difference between the sales prices and the costs of purchasing or manufacturing all goods that were sold during the period (sometimes called the markup); that is, net revenue minus only one of the expenses-- cost of goods sold. The gross profit ratio is the amount of each net sales dollar that was gross profit during the period. For this company, the rate was 36.7%, which means that

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\$.367 of each net sales dollar was gross profit (alternatively, 36.7% of each sales dollar was gross profit for the period).
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