PROBLEM 32 WORKING WITH INCOME STATEMENT Prepare an income s

PROBLEM 3-2 WORKING WITH INCOME STATEMENT Prepare an income statement and a income statement from the following DATA Sales Cost of goods sold General & administrative expenses Depreciation expenses Interest expense Income taxes S525,000 200,000 62,000 8,000 12,000 97,200 SOLUTION Income Statement and Common-Sized Income Statement: Sales Cost of goods sold Gross profits General & administrative expenses Depreciation expense Total operating expense Operating income (EBIT) Interest expense Earnings before taxes Taxes (40%) Net income Requirements: and open the workbook named: 1. Start Excel. Download Keown Martin Petty_Problem 3-2_Start. Important note: All calculations must be shown using cell references. Do NOT enter numerical values in the cells. 2. In cell C16, input the sales amount. (1 point) 3. In cell C17, input the cost of goods sold amount. (1 point) Note: The output of the expression or function you typed in this cell is expected as a positive number. 4. In cell C18, calculate the gross profits. (1 point) 5. In cell B19, input the general & administrative expenses amount. (1 point) Note: The output of the expression or function you typed in this cell is expected as a positive number. 6. In cell B20, input the depreciation expense amount. (1 point) Note: The output of the expression or function you typed in this cell is expected as a positive number. 7. In cell C21, calculate the total operating expense. (1 point) 8. In cell C22, calculate the operating income (EBIT). (1 point) 9. In cell C23, input the interest expense amount. (I point) Note: The output of the expression or function you typed in this cell is expected as a positive number. 10. In cell C24, calculate the carnings before taxes. (1 point) 11. In cell C25, input the taxes amount. (1 point) Note: The output of the expression or function you typed in this cell is expected as a positive number.

Solution

Income Statement Sales $ 5,25,000.00 Less: COGS $ 2,00,000.00 Gross Profit $ 3,25,000.00 General & Administerative Expenses $                                                            62,000.00 Depreciation Expense $                                                              8,000.00 Total Operating Expense $      70,000.00 Earnings before interest and taxes $ 2,55,000.00 Interest Expense $      12,000.00 Earnings befor taxes $ 2,43,000.00 Taxes (40% of $243000) $      97,200.00 Net Income $ 1,45,800.00 Common Size Income Statement Sales $ 5,25,000.00 ($525000/$525000)*100=100% Less: COGS $ 2,00,000.00 ($200000/$525000)*100=38% Gross Profit $ 3,25,000.00 ($325000/$525000)*100=62% General & Administerative Expenses $                                                            62,000.00 Depreciation Expense $                                                              8,000.00 Total Operating Expense $      70,000.00 ($70000/525000)*100=13% Earnings before interest and taxes $ 2,55,000.00 ($255000/$525000)*100=49% Interest Expense $      12,000.00 ($12000/$525000)*100=2% Earnings befor taxes $ 2,43,000.00 ($243000/$525000)*100=46% Taxes (40% of $243000) $      97,200.00 ($97200/$525000)*100=19% Net Income $ 1,45,800.00 ($145800/$525000)*100=28%