Question

5.9 Presented below is information for Furlow Company for the month of March 2015 Cost of goods sold $212,000 Rent expense US $ 32,000 Freight-out 7,000 Sales discounts 8,000 Insurance expense 6,000 Sales returns and allowances 13,000 Salaries and wages expense 58,000 Sales revenue 380,000 Instructions (a) Prepare a multiple-step income statement. (b) Compute the gross profit rate.

Answer 1

Furlow Company Income Statement For the Month Ended March 2015 Revenues Sales revenue $ 380,000 less: Sales returns and allowences $ 13,000 Sales Discounts $ 8.000 $ 21,000 Net Sales $ 359,000 Cost of Goods Sold $ 212,000 Gross Profit $ 147,000 Operating expenses Salaries and wages expense $ 58,000 Rent Expense $ 32,000 Insurance Expense $ 6,000 Freight-Out $ 7,000 Total Operating Expense $ 103,000 Net Income $ 44,000 b. Gross Profit Rate 38.68% Notes: Gross Profit Rate = gross Profit Net Sales = $147,000/$380,000 = 38.68%