grad3gcuedulearningPlatformuserusershtmloperationlogged In l

grad3.gcu.edu/learningPlatform/user/users.html?operation-logged In# learningPlatfo The following data is provided. The profit margin on sales for 2015 is Cash $500,000 600,000 1,100,000 $750,000 Accounts receivable (net) Inventories Plant assets (net) Accounts payable Income taxes payable Bonds payable 10% Preferred stock, tso par Common stock, $10 par Paid-in capital in excess of par800,000 Retained earnings Net credit sales Cost of goods sold Operating expenses Net income 800,000 1,300,0001 3,500,000 320,000 400,000 S0,000 100,000 700,000 1,000,000 1,200,000 1,000,000 900,000 1,750,000 2,000,000 6.400,000 4,200,000 1450,000 750,000 Depreciation included in cost of goods sold and operating expenses is $610,000. On May preferred dividends were not declared during 2015 ,000 shares of common stock were issued. The preferred stock is cumulative. The a Minimized View 750 6,400. 2,200 - 6.400. 2,200 +4.200 750 + 4.200

Solution

The formula for calculating Profit Margin on sales is:

Net Income/Net Sales.

Net Income is calculated by deducting all the operating and non operating expenses from Income.

In the given question, Even though Depreciation being a non operating expense inculded in Cost of goods sold and operating expense doesn\'t make a difference for calculating net income.

So Net Income= 750,000 and Net sales is 6,400,000.

As per formula profit margin on sales = 750,000/6,400,000.

Conclusion: Profit margin on sales for 2015 is 750/6400.