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
  • Advertising expense…………………………………….  $1,500,000
  • 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
  • Advertising expense…………………………………….  $1,500,000
  • Utility expense…………………………………………..    $190,000
  • Depreciation expense……………………………………    $210,000
  • Rent expense……………………………………………. $2,100,000
  • Insurance expense……………………………………….    $320,000
  • Income tax expense……………………………………...    $420,000

Homework Answers

Answer #1
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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