Question

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 23. $ Determine gross profit Determine operating expenses Determine Income before income taxes (IBT) Determine Income tax expense 27. $ _Determine net income 28.__% Calculate gross profit ratio (round to one decimal place). 29. 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

solution - 22 Net sales - $875,000 tot star sales discount of $12,000 Can not be deduct deducted from het sales since net sales has been arrived after deduction of sals getuan, attoo allowances and sals discunt. 002 solution 23 Gross profit = Net sales - Cost of goods axTaT serades sept o sold essors Profit - $875,000 - $425,000 oopill & - $450,000 solution 24 Salary expense $285,000 Advertising expense $ 95,000 uhlities expense $ 7,500 Total operating expense de $387,500 e Opill -002 DOFM

solution 25 Gross Profit sels! total operating expenses Atornis Net operating Income less other expenses - ( Interest experse) $450,00 ($ 387,500) $62,500 ($3000) tax t Net Income before $ 59,500 (331) solution 267 war? blo Income tax expense = IBT tax. pate 600, 2 0 0,2 = $59,560 x 200 000 = $ 11,900 solution 27 | de klowa komertuloa Net Income - IBT - tax expense Oozit & sendes et 59,500- 11,900 e z $ 47,600

Solution 28 Cross profit Ratio - Gross Bobit. Net sales -XICO = $450,000 xico $875,000 = 51.4% solution za 7 I As compared to competitors Cross margin, HT Company is doing better, & since GHT Company's Cross Bobit is 51.4% which is higher than its Competitor.