Question

E5.9 (LO 5) Financial Statement Presented below is information for Kaila Company for the month of March 2020. Cost of goods sold $215,000 Rent expense $ 30,000 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

Answer Kaila company Income statement for the month March 2020 Revenue: $380,000 sales less: sales retums and allowances $13,000 less: sales Discounts $8,000 $ 21,000 Net sales $ 359,000 less: Costof goods sold $215,000 $144,000 Cross profit Expenses : salaries and wages expense Rent expense – Freight out $ 58,000 $30,000 $7,000 $6,000 $101,000 \ Insurance expense Total expense Net Income (Grossprofit- Total Expense) $43,000

Cross profit rate = = Grossprofit/wet sales xloo $144,000 $359,000 x100 = 40.0%