Prepare a multi-step income statement for Freida, Incorporated (a furniture reta
ID: 2504881 • Letter: P
Question
Prepare a multi-step income statement for Freida, Incorporated (a furniture retailer) for
the year ending December 31, 2013 given the information below:
Interest expense 17,090
Beginning inventory 63,210
Depreciation expense 12,510
Management salaries 17,950
Advertising expenditures 12,930
Ending inventory 68,390
Gross Sales 462,720
Taxes 3,270
Returns and allowances 10,210
Lease payments 39,270
Materials purchases 228,580
R&D expenditures 4,890
Repairs and maintenance costs 2,910
a. What is Frieda
Explanation / Answer
Gross Profit = Net Sales - COGS
Operating Profit = Gross Profit - Operating Expenses
EBIT = Operating Profit - Interest Expense
Net operating Income = EBIT - Taxes'
Net profit margin = Net operating Income / Net Sales
Sales:
Gross Sales
462,720
Returns and allowances
10,210
Net Sales
452,510
COGS
Beginning Inventory
63,210
Materials Purchases
228,580
Ending Inventory
68,390
COGS
223,400
Gross Profit
229,110
Operating Expenses
Management salaries
17,950
Advertising expenditures
12,930
Lease payments
39,270
Repairs and maintenance costs
2,910
R&D expenditures
4,890
Depreciation expense
12,510
Total Operating Expenses
90,460
Operating Profit
138,650
Interest Expense
17090
EBIT
121,560
Taxes
3270
Net Operating Income
118,290
Net Profit Margin
26.14%
Sales:
Gross Sales
462,720
Returns and allowances
10,210
Net Sales
452,510
COGS
Beginning Inventory
63,210
Materials Purchases
228,580
Ending Inventory
68,390
COGS
223,400
Gross Profit
229,110
Operating Expenses
Management salaries
17,950
Advertising expenditures
12,930
Lease payments
39,270
Repairs and maintenance costs
2,910
R&D expenditures
4,890
Depreciation expense
12,510
Total Operating Expenses
90,460
Operating Profit
138,650
Interest Expense
17090
EBIT
121,560
Taxes
3270
Net Operating Income
118,290
Net Profit Margin
26.14%