ch05 - Falcetto Company Income Statement For the Month...

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Demonstration Problem The adjusted trial balance columns of the work sheet for the year ended December 31, 2005, for Falcetto Company are as follows. Debit Credit Cash 14,500 Accumulated Depreciation 18,000 Accounts Receivable 11,100 Notes Payable 25,000 Merchandise Inventory 29,000 Accounts Payable 10,600 Prepaid Insurance 2,500 Larry Falcetto, Capital 81,000 Store Equipment 95,000 Sales 536,800 Larry Falcetto, Drawing 12,000 Interest Revenue 2,500 Sales Returns and Allowances 6,700 673,900 Sales Discounts 5,000 Cost of Goods Sold 363,400 Freight-out 7,600 Advertising Expense 12,000 Store Salaries Expense 56,000 Utilities Expense 18,000 Rent Expense 24,000 Depreciation Expense 9,000 Insurance Expense 4,500 Interest Expense 3,600 673,900 Instructions Prepare an income statement assuming Falcetto Company does not use sub grouping for operating expenses. SOLUTION TO DEMONSTRATION PROBLEM
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Unformatted text preview: Falcetto Company Income Statement For the Month Ended December 31, 2005 Sales Revenue Sales $536,800 Less: Sales returns and allowances $6,700 Sales discounts 5,000 11,700 Net Sales 525,100 Cost of goods sold 363,400 Gross profit 161,700 Operating expenses Store salaries expense 56,000 Rent expense 24,000 Utilities expense 18,000 Advertsing expense 12,000 Depreciation expense 9,000 Freight-out 7,600 Insurance expense 4,500 Total operating expenses 131,100 Income from operations 30,600 Other revenues and gains Interest revenue 2,500 Other expenses and losses Interest expense 3,600 1,100 Net income $29,500 Questions : 1. What is the gross profit percentage or rate for this business ? 2. What is the gross margin percentage or rate for this business ?...
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