chp 5 - Accounting for a Merchandising Business Chapter 5...

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1 Chapter 5 Accounting for a Accounting for a Merchandising Merchandising Business GAP Income/Market Price Market Price Net Income (millions) $ 825 $ 534 $ 453 $ 825 $ 534 $ 453 $ 354 $ 354 $26 $28 $65 1995 1996 1997 1998 $18 Income Statement Information Is Influential and Non-Trivial The Oct.27, 1998 issue of the Wall Street Journal reports that American Express ʼ earnings increased 9.5% resulting in a $0.50 increase in its market price per share.
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2 Income Statement Information Is Influential and Non-Trivial The Oct.23, 1998 issue of the Wall Street Journal reported that 3M ʼ s net income fell by 81%. The results were marred by a restructuring charge of $332 million…Wall Street was disappointed by the news as 3M shares fell $2.8125 to $81.4375. Income Statement Information Assesses the results of operations Assesses management performance Reports income by matching revenues in the period earned with the expenses realized in the same period.
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3 Multiple Step Home Depot Income Statement For the Year Ending 2/2/03 Net Sales $58,247 Cost of Merchandise Sold 40,139 Gross Profit 18,108 Operating Expenses Selling and Store Operating 11,180 Pre-opening 96 General and Administrative 1,002 Total Operating Expenses 12,278 OPERATING INCOME 5,830 Interest and investment income 79 Interest expense 37 Earnings before provision for income tax 5,872 Provision for income taxes 2,208 NET EARNINGS $3,664 Single Step Home Depot Income Statement For the Year Ending 2/2/03 Net Sales $58,247 Interest and investment income 79 Total revenues 58,326 Expenses Cost of merchandise sold 40,139 Selling and Store Operating 11,180
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