Question

# Selected account balances from a retail firm’s adjusted trial balance at the end of the first...

Selected account balances from a retail firm’s adjusted trial balance at the end of the first quarter of operations for the current fiscal year include the following:

Based solely on the account information provided, what was the gross profit ratio for the quarter?

 a. 59.0% b. 3.1% c. 41.0% d. 4.4%
• Sales……………………………………………………\$32,000,000
• Executive & administrative salary expense…………… \$4,200,000
• Sales salary expense…………………………………… \$1,400,000
• Sales commissions……………………………………...  \$1,800,000
• Cost of goods sold…………………………………….. \$18,880,000
• Utility expense…………………………………………..    \$190,000
• Depreciation expense……………………………………    \$210,000
• Rent expense……………………………………………. \$2,100,000
• Insurance expense……………………………………….    \$320,000
• Income tax expense……………………………………...    \$420,000

Selected account balances from a retail firm’s adjusted trial balance at the end of the first quarter of operations for the current fiscal year include the following:

Based solely on the account information provided, what was the net profit margin for the quarter?

 a. 59.0% b. 3.1% c. 41.0% d. 4.4%
• Sales……………………………………………………\$32,000,000
• Executive & administrative salary expense…………… \$4,200,000
• Sales salary expense…………………………………… \$1,400,000
• Sales commissions……………………………………...  \$1,800,000
• Cost of goods sold…………………………………….. \$18,880,000
• Utility expense…………………………………………..    \$190,000
• Depreciation expense……………………………………    \$210,000
• Rent expense……………………………………………. \$2,100,000
• Insurance expense……………………………………….    \$320,000
• Income tax expense……………………………………...    \$420,000

 1 Sales 32000000 Less: Cost of goods sold 18880000 Gross Profit 13120000 Gross Profit 13120000 Divide by Sales 32000000 Gross Profit ratio 41.0% Option C 41.0% is correct 2 Sales 32000000 Less: Cost of goods sold 18880000 Gross Profit 13120000 Less: Expenses Executive & administrative salary expense 4200000 Sales salary expense 1400000 Sales commissions 1800000 Advertising expense 1500000 Utility expense 190000 Depreciation expense 210000 Rent expense 2100000 Insurance expense 320000 Income tax expense 420000 Total expenses 12140000 Net Profit 980000 Net Profit 980000 Divide by Sales 32000000 Net profit margin 3.1% Option B 3.1% is correct

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