Question

Mailings Review View Table Design Layout References Aa A APA A Aabbccddee Aabbccddee AaBbCcDc AaBbccdde A Heading 1 Heading 2 E Normal No Spacing Income statement information is presented here for two companies: [1] General motors Ltd. Microsoft Ltd. Sales $1,460,000 [6] Sales returns and allowances 28,000 48,000 Net sales Font Size 2,130,000 Cost of goods sold 657,000 1,172,000 Gross profit [2] [7] Operating expenses 580,000 [8] Income from operations 310,000 Other revenues Other expenses 4,100 Income before income tax [4] Income tax expense 38,600 Net income 250,900 Instructions (a) Calculate the missing amounts for items [1] to (10]. (b) Calculate the gross profit margin and profit margin for each company. 3,600 o [9] [10] 15/

Answer 1

a.  

	General Motors Ltd	Microsoft Ltd.
Sales	$ 14,60,000.00	$ 21,78,000.00
Sales return and allowances	$       28,000.00	$       48,000.00
Net Sales	$ 14,32,000.00	$ 21,30,000.00
Cost of goods sold	$    6,57,000.00	$ 11,72,000.00
Gross Profit	$    7,75,000.00	$    9,58,000.00
Operating Expenses	$    5,80,000.00	$    6,48,000.00
Income from Operations	$    1,95,000.00	$    3,10,000.00
Other revenues	$          3,600.00	$                       -
Other expenses	$                       -	$          4,100.00
Income before income tax	$    1,98,600.00	$    3,05,900.00
Income tax expense	$       38,600.00	$       55,000.00
Net Income	$    1,60,000.00	$    2,50,900.00

Working:

	General Motors Ltd	Microsoft Ltd.
Sales	1460000	2178000 (2130000+48000)
Less: Sales return and allowances	28000	48000
Net Sales	1432000 (1460000-28000)	2130000
Less: Cost of goods sold	657000	1172000
Gross Profit	775000 (1432000-657000)	958000 (2130000-1172000)
Less: Operating Expenses	580000	648000 (958000-310000)
Income from Operations	195000 (775000-580000)	310000
Add: Other revenues	3600	0
Less: Other expenses	0	4100
Income before income tax	198600 (195000+3600-0)	305900 (310000+0-4100)
Less: Income tax expense	38600	55000 (305900-250900)
Net Income	160000 (198600-38600)	250900

b.

	General Motors Ltd	Microsoft Ltd.
Gross Profit Margin = Gross Profit / Net Sales	54.12%	44.98%
	=775000/1432000	=958000/2130000
Profit Margin = Net Income / Net sales	11.17%	11.78%
	=160000/1432000	=250900/2130000