The comparative financial statements of B. Darin include the following data: 201
ID: 2560471 • Letter: T
Question
The comparative financial statements of B. Darin include the following data:
2014 2013
Income statement:
Total sales revenue $ 130,000 $ 100,000
Cost of goods sold 55,000 47,000
Operating expenses 39,000 32,000
Interest expense 3,500 3,500
Income tax expense 5,000 4,000
Net income 27,500 13,500
Balance sheet:
Current assets $115,000 $ 95,000
Plant, property and equipment, net 98,000 105,000
Current liabilities 45,000 38,000
Long-term liabilities 43,000 43,000
Stockholders’ equity 125,000 119,000
Total liabilities & stockholders’ equity 213,000 200,000
Use the information above to answer the following question. The gross profit percentage for 2014 is closest to:
42%
13.5%
57.7%
21.15%
a.42%
b.13.5%
c.57.7%
d.21.15%
Explanation / Answer
Gross profit = Total sales revenue - Cost of goods sold
= $130,000 - $55,000
= $75,000
Gross profit percentage = (Gross profit / Total sales revenue)*100
= ($75,000 / $130,000) *100
= 57.7% (Rounded off)
Hence, the correct answer is option c. 57.7%