Question

1. Culver Corporation reported net sales $715,000, cost of goods sold $500,500, operating expenses $126,000, and net income $62,920.
Calculate the profit margin and gross profit rate. (Round Profit margin answer to 2 decimal places, e.g. 10.20%. Round Gross profit rate answer to 0 decimal place, e.g. 10%.)

Profit margin		enter profit margin in percentages rounded to 2 decimal places %
Gross profit rate		enter gross profit rate in percentages rounded to 0 decimal  %

2. Presented here are the components in Sheridan Company’s income statement.
Determine the missing amounts.

Sales Revenue			Cost of Goods Sold			Gross Profit			Operating Expenses			Net Income
$ 65,504			$enter a dollar amount	(b)		$ 27,600			$enter a dollar amount	(d)		$11,132
$99,360			$64,400			$enter a dollar amount	(c)		$enter a dollar amount	(e)		$27,140
$enter a dollar amount	(a)		$66,148			$100,832			$42,504			$enter a dollar amount	(f)

3. Ivanhoe Company provides this information for the month ended October 31, 2022: sales on credit $324,000, cash sales $162,000, sales discounts $5,400, and sales returns and allowances $20,520.

Prepare the sales section of the income statement based on this information.

Answer 1

1.

Profit margin		8.80%
Gross profit rate		30 %

Calulations: Profit margin=

62920 * 100 715000

Gross profit rate=
sales - Cogs sales * 100
=
715000-500500 715000 * 100

2.

Sales Revenue			Cost of Goods Sold			Gross Profit			Operating Expenses			Net Income
$65,504			$37,904	(b)		$27,600			$16,468	(d)		$11,132
$99,360			$64,400			$34,960	(c)		$7,820	(e)		$27,140
$166,980	(a)		$66,148			$100,832			$42,504			$58,328

3. Sales section of Income Statement:

sales on credit		324000
Cash Sales		162000
Gross Sales		486000
Less: Sales Returns & Allowances	-20520
Less: Sales Discounts	-5400	-25920
Sales Revenue		460080