Quiz 1

During 2014, Widge-widge reported the following revenues and expenses: Revenues: $10,000 Expenses included: $1,000 of raw material costs $3,000 in new equipment purchased at year-end $1,000 in executive salaries $2,000 in factory labor $800 in recurring general legal expenses $300 in sales commissions $400 in travel expenses $500 in product delivery costs

Operating Profit (EBIT) = Revenues - (COGS + SG&A) Revenues: $10,000. COGS + SG&A: $1,000 + $1,000 + $2,000 + $800 + $300 + $400 + $500 = $6,000. Operating Profit (EBIT): $10,000 - $6,000 = $4,000

Jones Company has provided the following information: What is the operating income? Cash sales totaled $255,000. Credit sales totaled $479,000. Interest income was $7,700. Interest expense was $19,900. Cost of goods sold was $336,000. Rent expense was $36,000. Salaries expense was $49,000. Other operating expenses totaled $79,000.

Operating Rev = 255 +479 = 734 Operating Exp = 336 + 36 + 49 + 79 734-500 = 234 K

Clayton Corp. has provided the following information: What is gross profit? Operating (excluding COGS) expenses were $345,000; Operating income was $215,000; Net sales were $1,100,000; Interest expense was $71,000; Loss on sale of investments was $87,000; Income tax expense was $58,000.

Gross Profit = Net Sales - COGS. Gross Profit = Operating expenses + operating income 345+215

Clayton Corp. has provided the following information: What is the Gross Profit Margin? Gross profit was $620,000; Cost of goods sold was $380,000; Net income was $400,000.

Gross Profit = Sales - COGS. Therefore Sales = Gross Profit + COGS Sales (1000) = Gross Prof (620) + COGS (380) Gross Profit Percentage = 620/1000 = 62%

During 2014, Clayton Co. reported the following revenues and expenses: What is the gross profit margin? Revenues: $10,000 Expenses included: $1,000 of raw material costs $3,000 in new equipment purchased at year-end $1,000 in executive salaries $2,000 in factory labor $800 in recurring general legal expenses $300 in sales commissions $400 in travel expenses $200 in office supplies

Gross profit = Revenues - COGS = Revenues - Raw materials - factory labor = $10,000 - $1,000 - $2,000 = $10,000 - $3,000 = $7,000 Gross profit margin (GPM) = (Revenues - Expenses)/Revenues = $7,000 / $10,000 = 70%

During 2018, Clayton Co. reported the following activities: The company recognized revenues of $10,000 during the period. The company recognized cost of goods sold of $1,250. The company recognized $4,000 in operating expenses for salaries, rent, utilities, and other selling, general and administrative expenses. The company paid taxes in the amount of 25% of pretax income. In addition, the company purchased a new machine for $5,000 at the beginning of the year. The machine had a useful life of 20 years and no residual value, depreciated using the straight-line method. Company borrowed $5,000 at the beginning of the year. During the year, the company paid down $1,000 of the loan principal. During the year, the company paid $500 in interest on the loan The company had 10,000 shares outstanding at the beginning of the year and issued 5,000 new shares at the middle of the year.

Income Statement Revenue 10,000 COGS 1,250 SG&A 4,000 D&A 250 (new machine, wouldn't have counted if they purchased it at the end of year) Interest expense 500 Pretax income 4,000 Tax 1,000 Net income 3,000 Weighted average shares outstanding 12,500 Earnings per share $0.24 !!!Loan borrowing and any principal paydown is not captured within the income statement, only the associated interest expense!!! EPS requires that we calculate shares on a weighted average basis. Since half of the year the share count was 10,000 and the other half was 15,000, the weighted average was 12,500 (50% x 10,000 + 50% x 15,000).

Warren Corporation purchased a truck at a cost of $60,000. It has an estimated useful life of five years and estimated residual value of $5,000. At the beginning of year three, Warren's managers concluded that the total useful life would be four years, rather than five years. There was no change in the estimated residual value. What is the amount of depreciation that Warren should record for year 3 under the straight-line depreciation method?

Year 1 = 11,000 or (60,000 - 5,000) / 5 Year 2 = 22,000 End of year 2, beg of year 3 = 38k Now they changed to 4 years instead of 5 so 33k (after doing 38-5 because of residual value) So 33/2 = 16.5