PLEASE SHOW ALL WORK AND ACCOUNTS INVOLVED Merchandise Inventory $ 250,000 Cost
ID: 2736476 • Letter: P
Question
PLEASE SHOW ALL WORK AND ACCOUNTS INVOLVED
Merchandise Inventory $ 250,000 Cost of goods sold $ 1,523,000 Insurance expense $ 100,000 Land $ 100,000 Bond financing $ 400,000 Advertising expense $ 145,000 Sales $ 2,486,000 Taxes payable $ 26,000 Equipment $ 445,000 Cash $ 79,000 A/Receivable $ 120,000 Sales Salary expense $ 240,000 Office salary expense $ 165,000 Short term investments $ 65,000 Buildings $ 750,000 A/Payable $ 164,000 Notes payable $ 75,000 Common stock $ 475,000 Retained earnings $ 544,000 Accumulated depreciation $ 125,000 Depreciation expense $ 102,000 Supplies expense $ 26,000 Use the account info to directly solve for the answers. Be sure to show the calculations and accounts involved.
Gross profit/margin (in $)= __________ T
otal long-term assets = __________
Total liabilities = _______________
Income before taxes= ____________
Total Equity = ________________
Explanation / Answer
Sale = $2,486,000
Cost Of goods sold = $1,523,000
Gross margin = Sales – Cost of goods sold
= $2,486,000 - $1,523,000
= $963,000
Gross margin of company is $963,000.
b.
Value of land = $100,000
Value of building = $750,000
Equipment = $445,000
Total Long term Assets = Value of land + Value of building + Equipment
= $100,000 + $750,000 + $445,000
= $1,290,000
Value of long term assets is $1,295,000.
c.
Bond Financing = $400,000
Account Payable = $164,000
Note Payable = $75,000
Total liabilities = Bond Financing + Account Payable + Note Payable
= $400,000 + $164,000 +$75,000
= $639,000
Value of total liabilities is $639,000.
d.
Insurance Expenses = $100,000
Advertising = $145,000
Sales Salary = $240,000
Office salary = $165,000
Supplies = $26,000
Depreciation = $102,000
Office Expenses = Insurance + Advertising + Sales Salary + Office salary + Supplies
= $100,000 + $145,000 + $240,000 + $165,000 + $26,000
= $676,000
Total Office expense is $676,000.
Now profit before tax = Gross Margin – Office expenses – Depreciation
= $963,000 – $676,000 – $102,000
= $185,000
Net profit before tax is $185,000.
e.
Common Stock = $475,000
Retained earnings = $544,000
Total value of equity = Common Stock + Retained earnings
= $475,000 + $544,000
= $1,019,000
Total value of equity is $1,019,000.
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