Week Three Assignment - Week Three Assignment Problem 24....

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Week Three Assignment Problem 24. Preparing an income statement: Expenses Income Net sales $315,000.00 Cost of goods sold $130,750.00 Total Costs of goods sold - $130,750.00 Gross Profit $184,250.00 Operating Expenses Selling and administrative expenses $90,050.00 Total Operating Expenses -$90,050.00 Operating income $94,200.00 Non-Operating Revenue and Expenses Interest revenue $5,000.00 Income before income taxes $99,200.00 Income tax expense $2,500.00 -$2,500.00 Net Income $96,700.00 Chapter 9 Problem 14 1. Corporations pay taxes based on the amount of income before income taxes. true 2. A company that changes from one accounting principle to another generally must report an extraordinary item in its income statement in the year of the change. true 3. The market price to book value ratio indicates how much investors are willing to pay for each $1 of a company’s net assets. true 4. If a corporation’s common stock has a much higher price-earnings ratio than its historical norm, sophisticated investors will typically view that stock as “bargain” priced. false 5. If Company A owns 35 percent of Company B’s common stock, Company A should use the equity method of accounting and consolidate both companies’ financial statements at year- end. true 6. Decision makers commonly use activity ratios to evaluate a company’s liquidity. true 7. Common-sized financial statements can be used to identify important structural changes in a company’s operating results and financial condition over a period of time. true
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Week Three Assignment - Week Three Assignment Problem 24....

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