ACCHAPTER 46 - 4-51(15-20 min This problem is difficult...

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4-51 (15-20 min.) This problem is difficult because it introduces expense items that are not mentioned in the text. The format that follows is that shown in Exhibit 4-8, Part B. The terms here are those used by Intel. INTEL CORPORATION Statement of Income For the Year Ended December 27, 2003 (In Millions) Sales $30,141* Cost of sales 13,047 Gross margin $17,094 Operating expenses: Marketing, general and administrative $4,278 Research and development 4,360 Amortization and impairment of intangibles 301 Impairment of goodwill 617 Purchased in-process R & D 5 9,561 Operating profit $ 7,533 Other (revenue) and expense: Interest and other income, net (192) Losses on equity securities, net 283 91 Income before income taxes 7,442 Provision for taxes 1,801 Net income 5,641 * $13,047 + 17,094 = $30,141 Accrual Accounting and Financial Statements 1
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4-52 (20-30 min.) Amounts are in thousands. 1. The format of the income statement that follows is that shown in Exhibit 4-8, Part A. The terms are those used by Harley Davidson. HARLEY DAVIDSON Statement of Income and Retained Earnings For the Year Ended December 31, 2003 (In Thousands) Net sales revenue $4,624,274 Financial services income 279,459 Interest income, net 23,088 Total sales and other income $4,926,821 Expenses: Cost of goods sold $2,958,708 Financial services expense 111,586 Selling, administrative and engineering expense 684,175 Other expense, net 6,317 Provision for income taxes 405,107 Total expenses 4,165,893 Net income $ 760,928 Retained earnings at beginning of year 2,372,095 * Total $3,133,023 Cash dividends 58,986 Retained earnings at end of year $3,074,037 *Beginning retained earnings + $760,928 - $58,986 = $3,074,037 Beginning retained earnings = $3,074,037 + $58,986 – $760,928 = $2,372,095
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4-52 (continued) 2. Gross profit = Sales – Cost of goods sold = $4,624,274 - $2,958,708 = $1,665,566 Gross profit percentage = $1,665,566 ÷ $4,624,274 = 36.0% Net income percentage = $760,928 ÷ $4,624,274 = 16.5% Students may combine net sales revenue and financial services revenue to compute a total sales figure. In that case, cost of goods sold and financial services expense must also be combined in computing gross profit: Gross profit = ($4,624,274 + $279,459) – ($2,958,708 + $111,586) = $4,903,733 - $3,070,294 = $1,833,439 Gross profit percentage = $1,833,439 ÷ $4,903,733 = 37.4% 3. Net income ÷ Average common stockholders' equity = $760,928 ÷ $2,595,303 = 29.3% Accrual Accounting and Financial Statements 3
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4-53 (30-50 min.) The company's actual financial statements are condensed here. Students may use other acceptable formats. 1. THE HOME DEPOT, INCORPORATED Statement of Income and Retained Earnings For the Year Ending February 2, 2003 (In Millions) Sales $58,247 Cost of merchandise sold 40,139 Gross margin 18,108 Selling, general, and administrative expenses 12,278 Operating income 5,830 Interest expense (37) Other income 79 Income before income taxes 5,872 Provision for income taxes 2,208 Net income 3,664 Retained earnings, beginning of year 12,799 Cash dividends (492 ) Retained earnings, end of year $15,971
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This note was uploaded on 06/20/2010 for the course FINA 6266 taught by Professor Burt during the Spring '10 term at University of Arkansas for Medical Sciences.

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ACCHAPTER 46 - 4-51(15-20 min This problem is difficult...

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