Concept Check General Ledger for ABC Company The following is the general ledger
ID: 2604015 • Letter: C
Question
Concept Check
General Ledger for ABC Company
The following is the general ledger for ABC Company as of December 31, 20X1. Use this information to answer questions (1) through (4).
1. What is the amount of gross profit to be reported on ABC Company’s 12/31/X1 income statement?
2. What is the amount of operating income (EBIT) to be reported on ABC Company’s 12/31/X1 income statement?
3. What is the amount of income before incomes taxes (EBT) to be reported on ABC Company’s 12/31/X1 income statement?
4. What is the amount of net income to be reported on ABC Company’s 12/31/X1 Income Statement?
$39,100 $14,100 $40,500 $17,800 ABC Company General Ledger As of December 31, 20X1 Amount Assets Cash Accounts receivable Supplies Prepaid rent Equipment (net Liabilities Accounts payable Salaries pavable Interest payable Utilities payable Bonds pavable Stockholders' equit Common stock Retained earnings Dividends Revenues Sales revenue Interest revenue Expenses Cost of goods sold Salaries expense Rent expense Supplies expense Utilities expense Depreciation expense Interest expense $ 29,400 8,100 4,900 20.200 63,800 6,300 4,000 1.100 3.700 38400 60,900 0 2100 54 200 1,400 15,100 7100 4,900 1.300 4,800 2,500 2100 3.700Explanation / Answer
Solution : ABC Company
Income Statement Ratios :
1. Gross Profit = Sales - Cost of goods sold = 54,200 -15,100 = 39,100
2. EBIT = Earnings before Interest and Tax expenses = All operating incomes less all operating expenses ( excl interest and taxes) = 54,200 - 15,100 - 7,100 - 4,900 - 1,300 - 4,800 - 2500 = 18,500
3. EBT = EBIT less interest expenses add interes income ( non operating ) = 18,500 -2100 +1400 = 17,800
4. Net income = EBT less Income tax expenses = Total Earnings post tax effects = 17,800 - 3,700 = 14,100
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