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Unformatted text preview: E5-11a) Compute Payton's gross profit.GROSS PROFIT = 900,00 - 540,000 = $ 360,000______________________________________b) Compute the gross profit rate. Why is this rate computed by financial statement users?(360,000/900,000)/100 = 4/10of 100 = 40%This is known as the GROSS PROFIT MARGIN.______________________________________c) What is Payton's income from operations and net income?1)Income from Operations = 360,000 - 230,000 = $130,000.2)Net Income = 130,000 - 11,000 = $119,000______________________________________d) If Payton prepared a single-step income statement, what amount would it report for netincome?NET INCOME = $119,000._____________________________________e) In what section of its classified balance sheet should Payton report merchandise inventory?Inventory is reported as part of the CURRENT ASSETS.Comment on ROLCAM's Answer: 1000 characters remaining Submit Comment E6-2Unadjusted Ending inventory $732,5701. Included in the company's count were goods with a cost of $257,200 1....
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This note was uploaded on 05/29/2011 for the course ACC 557 taught by Professor Johnson during the Spring '11 term at California Western School of Law.
- Spring '11