Question

12. Refer to the Camilia Communications' data in problems #10 and #11. Requirement: R1. Calculate the gross profit percentage and rate of inventory turnover for 2018. One year earlier, at July 31, 2018, Camilia Communications' inventory balance was $325.

Answer 1

Ans. 11	CAMILIA CORPORATIONS
	Balance Sheet
	For the Month Ended July, 31 2018
	Assets:
	Current assets:
	Cash	$2,900
	Accounts receivables	$3,200
	Merchandise inventory	$1,100
	Total current assets		$7,200
	Non Current assets:
	Equipment, net	$9,500
	Total non current assets		$9,500
	Total Assets		$16,700
	Liabilities and Stockholder's Equity:
	Current Liabilities:
	Accounts payable	$4,300
	Accrued liabilities	$1,800
	Total current liablities (a)	$6,100
	Long term liablities:
	Notes payable, long term	$500
	Total long term liablities (b)	$500
	Total Liabilities (a+b)		$6,600
	Stockholder's equity:
	Camilia capital	$4,365
	Retained earnings	$5,735
	Total Stockholder's Equity		$10,100
	Total Liabilities and Stockholder's Equity		$16,700
Ans. 12	Gross profit percentage = Gross profit / Net sales revenue * 100
	$10,500 / $29,200 * 100
	35.96%
	Inventory turnover = Cost of goods sold / Average inventory
	$18,700 / $712,.50
	26.25	times
	*Average inventory = (Beginning inventory + Ending inventory) / 2
	($325 + $1,100) / 2
	$712.50
	*WORKING NOTES:
	*Calculations of Net income:
	CAMILIA CORPORATIONS
	Income Statement
	For the Month Ended July, 31 2018
	Particulars	Amount	Amount
	Net sales revenue		$29,200
	Cost of goods sold		-$18,700
	Gross profit		$10,500
	Less: Operating expenses :
	Selling expenses	-$1,400
	Administrative expenses	-$3,300
	Total operating expenses		-$4,700
	Operating income (EBIT)		$5,800
	Less: Interest expenses		-$65
	Net income		$5,735
	*Calculations of Ending balance of retained earnings:
	CAMILIA CORPORATIONS
	Retained Earnings Statement
	For the Month Ended July, 31 2018
	Particulars		Amount
	Beginning balance of Retained earnings		$0
	Add: Net income		$5,735
	Less: Dividends		$0
	Ending balance of Retained earnings		$5,735
	*Net Income is added and dividends are subtracted from beginning balance of retained earnings.