Question

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Question 9 View Policies Show Attempt History Current Attempt in Progress Presented below is information for Blossom Company for the month of January 2017 Cost of goods sold $215,600 Rent expense $32,600 Freight-out 8,100 Sales discounts 8,900 Insurance expense 13,700 Sales returns and allowances 17,600 Salaries and wages expense 62,100 Sales revenue 398,500 Income tax expense 4,800 Other comprehensive income (net of $400 tax) 2,000

Answer 1

BLOSSOM COMPANY
Income Statement
For the Month Ended January 31, 2017
Sales
Sales Revenue		$398,500
Less:
Sales discount	$8,900
Sales returns and allowances	$17,600
		$26,500
Net Sales		$372,000
Cost of goods sold		$215,600
Gross profit                                     [$372,000 - $215,600]		$156,400
Operating Expenses:
Insurance expenses	$13,700
Salaries and Wages expenses	$62,100
Rent expense	$32,600
Frieght expense	$8,100
Total operating expenses		$116,500
Income Before Income taxes           [$156,400 - $116,500]		$39,900
Income tax Expense		$4,800
Net Income / (Loss)                        [$39,900 - $4,800]		$35,100

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BLOSSOM COMPANY
Comprehensive Income Statement
For the Month Ended January 31, 2017
Net Income / (Loss)	$35,100
Other Comprehensive Income / (loss)	$2,000
Comprehensive Income / (Loss)        [$35,100 + $2,000]	$37,100

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Profit Margin                      [Refer working note 1]	9.4%
Gross profit rate                 [Refer working note 2]	42.0%

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Working note 1 - Calculation of Profit Margin:
Net Income                                                                    (a)	$35,100
Net Sales revenue   [Refer income statement]               (b)	$372,000
Profit Margin rate                                                          (a / b)	9.40%

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Working note 2 - Calculation of gross Profit rate:
Gross Profit                                                                      (a)	$156,400
Net Sales revenue    [Refer income statement]                  (b)	$372,000
Profit Margin rate                                                             (a / b)	42.0%