[The following information applies to the questions displayed below. Below are a
ID: 2397673 • Letter: #
Question
[The following information applies to the questions displayed below. Below are amounts found in the income statements of three companies. Sales Cost of Operating Expenses $5,000 13,100 3,000 Non-operating Income Tax Company Revenue $32,000 35,000 40,000 Goods Sold Expenses $2,000 7,000 0 Expense $2,000 0 3,000 $4,800 Henry Grace James 24,500 24,800 value: Required information 1.25 points Required 1. For each company, calculate (a) gross profit, (b) operating income, (c) income before income taxes, and (d) net income. (Negative amounts should be indicated by a minus sign.) Gross Profit Operating Income Before Net Income Income taxes Income Loss Henry Grace JamesExplanation / Answer
HENRY
GRACE
JAMES
SALES
32000
35000
40000
(4800)
(24500)
(24800)
GROSS PROFIT
27200
10500
15200
(5000)
(13100)
(3000)
OPERATING INCOME
22200
(2600)
12200
(2000)
(7000)
0
INCOME BEFORE INCOME TAX
20200
(9600)
12200
(2000)
0
(3000)
NET INCOME /(LOSS)
18200
(9600)
9200
GROSS PROFIT
OPERATING INCOME
INCOME BEFORE INCOME TAX
NET INCOME /(LOSS)
HENRY
27200
22200
20200
18200
GRACE
10500
-2600
-9600
-9600
JAMES
15200
12200
12200
9200
Gross profit ratio calculation
GROSS PROFIT
SALES
GROSSPROFIT = (GROSSPROFIT/SALES)*100
GROSS PROFIT RATIO
HENRY
27200
32000
(27200/32000)*100
85%
GRACE
10500
35000
(10500/35000)*100
30%
JAMES
15200
40000
(15200/40000)*100
38%
Henry company has the most favorable ratio (GROSS PROFIT RATIO = 85%)
HENRY
GRACE
JAMES
SALES
32000
35000
40000
- COST OF GOODS SOLD
(4800)
(24500)
(24800)
GROSS PROFIT
27200
10500
15200
- OPERATING EXPENSE
(5000)
(13100)
(3000)
OPERATING INCOME
22200
(2600)
12200
- NON-OPERATING EXPENSE
(2000)
(7000)
0
INCOME BEFORE INCOME TAX
20200
(9600)
12200
- INCOME TAX
(2000)
0
(3000)
NET INCOME /(LOSS)
18200
(9600)
9200
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