Question

The Max, is a mall-based specialty retailer of casual apparel and accessories. The company concept is to provide the customer with a focused selection of high-quality, active-oriented fashions at compelling values. The items reported on its income statement for an earlier year (ended March 31) are presented here (dollars in thousands) in simplified form in alphabetical order: Cost of goods sold Interest expense Net revenue Other selling, general, and administrative expenses Provision for income taxes Weighted average shares outstanding $1,141, 349 630 2,075,531 400, 883 87,387 73,832 Required: a. Prepare a classified (multiple-step) consolidated income statement (showing gross profit, operating income, and income before income taxes). Include a presentation of basic earnings per share. b. What is the gross profit percentage? Complete this question by entering your answers in the tabs below.

Answer 1

The multi-step consolidated income statement is shown below
THE MAX
Consolidated Statement of Income
For the year ended March 31, Current year
(In thousands except per share amounts)
Net revenue	$2,075,531
Less: Cost of goods sold	$1,141,349
Gross profit	$934,182
Less: Operating expenses
Other selling, general and administrative expenses	$400,883
Total operating expenses	$400,883
Operating income	$533,299
Less: Other revenue and expenses
Interest expense	$630
Income before taxes	$532,669
Less: Provision for income taxes	$87,387
Net income	$445,282
Earnings per share:
Basic Earnings per share	$6.03	445282/73832
Weighted average shares outstanding	73,832
b.
Gross profit percentage	Gross profit/Net revenue
Gross profit percentage	934182/2075531
Gross profit percentage	45.01%