Question

Please show work! thank you

Use the following to answer questions 22-29 GHT Corporation reports the following amounts in its December 31, 20XD income statement: Cost of goods sold Sales discounts Salaries expense Interest expense $425,000 12,000 285,000 3,000 Net sales Advertising expense Utilities expense Effective income tax rate $875,000 95,000 7,500 20% Determine Sales _Determine gross profit _Determine operating expenses Determine Income before income taxes (IBT) Determine Income tax expense _Determine net income _ _% Calculate gross profit ratio (round to one decimal place). Comparing GHT's common sized income statement with its competitor. The competitor's gross margin is 45.0%, which company is doing better?

Answer 1

Answer of Question 22:

Net Sales = Sales – Sales Discounts
$875,000 = Sales - $12,000
Sales = $875,000 + $12,000
Sales = $887,000

Answer of Question 23:

Gross Profit = Net Sales – Cost of Goods Sold
Gross Profit = $875,000 - $425,000
Gross Profit = $450,000

Answer of Part 24:

Operating Expense = Salaries Expense + Advertising Expense + Utilities Expense
Operating Expense = $285,000 + $95,000 + $7,500
Operating Expense = $387,500

Answer of Part 25:

Income Before Income Taxes = Gross Profit – Operating Expense – Interest Expense
Income Before Income Taxes = $450,000 - $387,500 - $3,000
Income Before Income Taxes = $59,500

Answer of Part 26:

Income Tax Expense = Income Before income Taxes * Effective Income Tax Rate
Income Tax Expense = $59,500 * 20%
Income Tax Expense = $11,900

Answer of Part 27:

Net Income = Earnings Before Income Tax – Income Tax Expense
Net Income = $59,500 - $11,900
Net income = $47,600

Answer of Part 28:

Gross Profit Ratio = Gross profit / Net Sales *100
Gross Profit Ratio = $450,000 / $875,000 * 100
Gross Profit Ratio = 51.43%