Previous Assume a companys Income Statement for Year 12 is a

Previous Assume a company\'s Income Statement for Year 12 is as follows: Income Statement Data Net Revenues from Footwear Sales Cost of Pairs Sold Warehouse Expenses Marketing Expenses Administrative Expenses Operating Profit (Loss) Interest Income (expenses) Pre-tax Profit (Loss) Income Taxes Net Profit (Loss) Year 12 000s) 330,000 240,000 15,000 35,000 8,000 32,000 (10,000) 22,000 6,600 $15,400 Based on the above data, which of the following statements is false? O Warehouse expenses are 4.5% of net revenues. O Marketing costs are 10.6% of net revenues. o cost of pairs sold are 72.7% of net revenues. Administrative expenses are 2.4% of net revenues. Interest expenses are 2.7% of net revenues Copying, redistributing, or website posting is expressly prohibited and constitutes copyright viola Copyright© 2018 by Glo-Bus Software, Inc. 2

Solution

False statement is (Interest expenses are 2.7% of net revenues.)

Explanation;

Percentage of interest expenses of net revenues will ne calculated as follow;

Formula is as follow;

(Interest expenses * 100) / Net revenues

Now let’s put the values in this formula;

($10000 * 100) / $330000 = 3.03%

Thus it is clear that interest expenses are not 2.7% of net revenues because it is 3.03% of net revenues.