Chapter 4: 4-14DQ (page 205)
Refer to the income statement of Samsung in Appendix A. Does its income statement report a gross profit figure? If yes, what is the amount?
Year | Gross profit |
2015 | KRW77,171,364 |
2014 | KRW77,927,187 |
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company.
| NELSON COMPANY | ||
| Unadjusted Trial Balance | ||
| January 31, 2017 | ||
Debit | Credit | |
Cash | \(1,000 | |
Merchandise inventory | 12,500 | |
Store supplies | 5,800 | |
Prepaid insurance | 2,400 | |
Store equipment | 42,900 | |
Accumulated depreciation – store equipment | \)15,250 | |
Account payable | 10,000 | |
Common stock | 5,000 | |
Retained earnings | 27,000 | |
Dividends | 2,200 | |
Sales | 111,950 | |
Sales discount | 2,000 | |
Sales return and allowance | 2,200 | |
Cost of goods sold | 38,400 | |
Depreciation expenses – store equipment | 0 | |
Salaries expenses | 35,000 | |
Insurance expense | 0 | |
Rent expense | 15,000 | |
Store supplies expense | 0 | |
Advertising expense | 9,800 | |
Total | \(169,200 | \)169,200 |
Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system.
Required
1. Prepare adjusting journal entries to reflect each of the following:
a. Store supplies still available at fiscal year-end amount to \(1,750.
b. Expired insurance, an administrative expense, for the fiscal year is \)1,400.
c. Depreciation expense on store equipment, a selling expense, is \(1,525 for the fiscal year.
d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows \)10,900 of inventory is still available at fiscal year-end.
2. Prepare a multiple-step income statement for fiscal year 2017 that begins with gross sales and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses.
3. Prepare a single-step income statement for fiscal year 2017.
4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2017. (Round ratios to two decimals.)
Refer to the income statement for Samsung in Appendix A. What does Samsung title its cost of goods sold account?
Use the following information on current assets and current liabilities to compute and interpret the acid-test ratio. Explain what the acid-test ratio of a company measures.
Cash | \(1,490 | Prepaid expenses | \)700 |
Accounts receivables | 2,800 | Accounts payable | 5,750 |
Inventory | 6,000 | Other current liabilities | 850 |
Refer to QS 4-8 and prepare journal entries to record each of the merchandising transactions assuming that the company records purchases using the gross method and a periodic inventory system.
BTN 4-9 Samsung (Samsung.com), Apple, and Google are competitors in the global marketplace. Key comparative figures for each company follow.
Net sales | Cost of sales | |
Samsung | W200,653,482 | W123,482,118 |
Apple | \(233,715 | \)140,089 |
\(74,989 | \)28,164 |
* Millions of Korean won for Samsung.
* Millions of dollars for Apple and Google.
Required
1. Rank the three companies (highest to lowest) based on the gross margin ratio.
2. Which of the companies uses a multiple-step income statement format? (These companies’ income statements are in Appendix A.)
What do you think about this solution?
We value your feedback to improve our textbook solutions.
