Most people know Hewlett Packard Company (HP) as a leading supplier of personal computers, printers and scanners, mid storage and networking products for large and small customers alike. However, HP also is a major provider of technology consulting, outsourcing, and services to business, educational, and government organizations. Finally, HP also provides financing for products and services to its larger customers. As a consequence, its income statement shows three sources of operating revenues (goods/services/financing) and three related costs of goods/services/financing provided to customers. Presented below are the items adapted from its recent income statement for the year ended October 31 (in millions, except per share amounts). Net earnings per share was $3.78 mid the weighted-avenge shares used in the computation was 2,319.

Required:I. Recognizing that HP has three sources of operating revenues, prepare a classified income statement for HP following the format and using the subtotals presented in Exhibit 5.5.
2. Which source of operating revenues produces the highest grossprofit?

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Acquisition-related charges Amortization of purchased intangible assets Cost of financing Cost of products Cost of services Financing S 293 Product sales $84,799 2,213 2,959 1,144 30,590 Seling, general and administrative 12,718 40,816 1,484 Provision for taxes 302 Research and development 65,064 Restructuring charges 418 Service sales 505 income