Income Cost of Goods Sold Cost of Goods Sold Labor & wages Materials Other costs Shipping...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Income Cost of Goods Sold Cost of Goods Sold Labor & wages Materials Other costs Shipping Wholesale items Total Cost of Goods Sold GROSS PROFIT Expenses Charitable contributions Fees & subscriptions Marketing Meals and Entertainment Office expenses & utilities Payroll expenses - administration Property taxes Reference materials Repair & Maintenance Salaries & wages Supplies & small tools Telephone & internet Travel Total Expenses NET OPERATING INCOME Other Income Other Expenses NET OTHER INCOME NET INCOME Montana Furniture Design Profit and Loss January 2018 - December 2020 JAN-DEC 2018 $2,276,200.04 535,388.59 358,432.76 17,572.46 120,887.26 369,990.57 $1,402,271.64 $873,928.40 27,181.75 13,944.88 14,803.36 1,301.94 8,186.70 5,491.70 2,353.90 9,733.46 225,935.42 5,568.83 5,077.83 8,657.06 $328,236.83 $545,691.57 $56.08 $0.00 $56.08 $545,747.65 + JAN-DEC 2019 $2,018,919.33 487,623.68 380,220.98 24,162.06 116,725.88 305,975.62 $1,314,708.22 $704,211.11 40,520.25 12,656.21 28,961.30 700.52 22,029.10 2,408.13 17.25 19,141.09 228,873.71 4,634.71 3,782.59 11,214.06 $374,938.92 $329,272.19- $52.15 $0.00 $52.15 $329,324.34 JAN-DEC 2020 $2,544,841.58 537,451.37 512,163.80 17,390.32 137,198.74 364,227.35 $1,568,431.58 $976,410.00 42,285.00 16,440.78 30,472.93 1,926.62 19,368.75 1,027.64 2,479.04 49.95 17,400.04 250,031.63 5,719.65 5,902.69 12,855.67 $405,960.39 $570,449.61 $171.00 $58.48 $112.52 $570,562.13 ASSETS Current Assets Bank Accounts Checking Savings Petty Cash Total Bank Accounts Accounts Receivable Accounts Receivable Total Accounts Receivable Other Current Assets Total Current Assets Fixed Assets Accumulated depreciation Equipment Improvements Roof Building addition Total Fixed Assets Inventory TOTAL ASSETS LIABILITIES AND EQUITY Liabilities Current Liabilities Accounts Payable Accounts Payable Total Accounts Payable Credit Cards Line of Credit Total Current Liabilities Long-Term Liabilities Total Liabilities Equity TOTAL LIABILITIES AND EQUITY Montana Furniture Design Balance Sheet 2018 through 2020 JAN-DEC 2018 29,210.44 5.00 6,066.58 $35,282.02 39,695.00 $39,695.00 $17,681.69 $92,658.71 -227,052.00 256,308.00 30,870.00 27,450.13 $87,576.13 $612,601.00 $792,835.84 0.00 $0.00 $-6,021.46 $60,000.00 $53,978.54 $0.00 $53,978.54 $738,857.30 $792,835.84 JAN-DEC 2019 75,266.59 5.27 0.00 $75,271.86 37,890.29 $37,890.29 $0.00 $113,162.15 -239,224.00 262,447.00 5,300.40 30,870.00 27,450.13 $86,843.53 $588,791.00 $788,796.68 35,772.72 $35,772.72 $7,819.82 $0.00 $43,592.54 $0.00 $43,592.54 $745,204.14 $788,796.68 JAN-DEC 2020 60,118.13 72,271.10 0.00 $132,389.23 212,066.58 $212,066.58 $24,476.40 $368,932.21 -243,369.00 262,447.00 5,300.40 30,870.00 27,450.13 $82,698.53 $294,153.00 $745,783.74 0.00 $0.00 $27,723.07 $0.00 $27,723.07 $112,170.40 $139,893.47 $605,890.27 $745,783.74 Use the attached financial statements to answer the following questions. Please be sure to read and adhere to the additional guidance listed on the following page. 1. Calculate gross profit as a percentage of sales for each year 2018-2020. This percentage represents how much of total revenue the business still has after paying for costs of goods sold. What does the change in gross profit from year to year say about this business? 3. The owner of Montana Furniture Design is worried about the economy. Specifically, she knows that it has become more difficult to buy and receive materials quickly. In order to avoid future issues, she's decided to buy materials of about $1,000,000 at the end of the year (2021) to keep in inventory for next year's production. Will this impact her net income for 2021? If so, how? 4. The owner of Montana Furniture Design would like to expand to several other states. To do this, she hopes to get outside funding. She wants to show her 2021 financials to a potential lender. Will this impact advice you may give her about buying a significant amount of inventory at year end 2021? Why or why not? 5. You'll notice that account receivable at year end 2020 are significantly larger than they've been in the past. While assessing the financials, the lender will no doubt note this and inquire further. What are three relevant and helpful questions the lender could ask in order to determine the risk around collecting all of those receivables? (Assume each of your questions would be answered by the owner with support documentation to verify the response) 6. Montana Furniture Design is presented using Generally Accepted Accounting Principles. This requires that the financials be presented using the accrual method of accounting. If we changed the 2020 method of accounting from the accrual method to the cash method, what would the 2020 net income be? 7. You'll notice that payroll costs went up in 2020 compared to 2019. Were the additional employees hired office staff or production staff or both? If I told you there were no new employees during 2020, what would this mean in regard to the increase in payroll costs? If you're thinking about investing in this business, is it a good thing or a bad thing that no new employees were hired over the course of 20203 Why or why not? Income Cost of Goods Sold Cost of Goods Sold Labor & wages Materials Other costs Shipping Wholesale items Total Cost of Goods Sold GROSS PROFIT Expenses Charitable contributions Fees & subscriptions Marketing Meals and Entertainment Office expenses & utilities Payroll expenses - administration Property taxes Reference materials Repair & Maintenance Salaries & wages Supplies & small tools Telephone & internet Travel Total Expenses NET OPERATING INCOME Other Income Other Expenses NET OTHER INCOME NET INCOME Montana Furniture Design Profit and Loss January 2018 - December 2020 JAN-DEC 2018 $2,276,200.04 535,388.59 358,432.76 17,572.46 120,887.26 369,990.57 $1,402,271.64 $873,928.40 27,181.75 13,944.88 14,803.36 1,301.94 8,186.70 5,491.70 2,353.90 9,733.46 225,935.42 5,568.83 5,077.83 8,657.06 $328,236.83 $545,691.57 $56.08 $0.00 $56.08 $545,747.65 + JAN-DEC 2019 $2,018,919.33 487,623.68 380,220.98 24,162.06 116,725.88 305,975.62 $1,314,708.22 $704,211.11 40,520.25 12,656.21 28,961.30 700.52 22,029.10 2,408.13 17.25 19,141.09 228,873.71 4,634.71 3,782.59 11,214.06 $374,938.92 $329,272.19- $52.15 $0.00 $52.15 $329,324.34 JAN-DEC 2020 $2,544,841.58 537,451.37 512,163.80 17,390.32 137,198.74 364,227.35 $1,568,431.58 $976,410.00 42,285.00 16,440.78 30,472.93 1,926.62 19,368.75 1,027.64 2,479.04 49.95 17,400.04 250,031.63 5,719.65 5,902.69 12,855.67 $405,960.39 $570,449.61 $171.00 $58.48 $112.52 $570,562.13 ASSETS Current Assets Bank Accounts Checking Savings Petty Cash Total Bank Accounts Accounts Receivable Accounts Receivable Total Accounts Receivable Other Current Assets Total Current Assets Fixed Assets Accumulated depreciation Equipment Improvements Roof Building addition Total Fixed Assets Inventory TOTAL ASSETS LIABILITIES AND EQUITY Liabilities Current Liabilities Accounts Payable Accounts Payable Total Accounts Payable Credit Cards Line of Credit Total Current Liabilities Long-Term Liabilities Total Liabilities Equity TOTAL LIABILITIES AND EQUITY Montana Furniture Design Balance Sheet 2018 through 2020 JAN-DEC 2018 29,210.44 5.00 6,066.58 $35,282.02 39,695.00 $39,695.00 $17,681.69 $92,658.71 -227,052.00 256,308.00 30,870.00 27,450.13 $87,576.13 $612,601.00 $792,835.84 0.00 $0.00 $-6,021.46 $60,000.00 $53,978.54 $0.00 $53,978.54 $738,857.30 $792,835.84 JAN-DEC 2019 75,266.59 5.27 0.00 $75,271.86 37,890.29 $37,890.29 $0.00 $113,162.15 -239,224.00 262,447.00 5,300.40 30,870.00 27,450.13 $86,843.53 $588,791.00 $788,796.68 35,772.72 $35,772.72 $7,819.82 $0.00 $43,592.54 $0.00 $43,592.54 $745,204.14 $788,796.68 JAN-DEC 2020 60,118.13 72,271.10 0.00 $132,389.23 212,066.58 $212,066.58 $24,476.40 $368,932.21 -243,369.00 262,447.00 5,300.40 30,870.00 27,450.13 $82,698.53 $294,153.00 $745,783.74 0.00 $0.00 $27,723.07 $0.00 $27,723.07 $112,170.40 $139,893.47 $605,890.27 $745,783.74 Use the attached financial statements to answer the following questions. Please be sure to read and adhere to the additional guidance listed on the following page. 1. Calculate gross profit as a percentage of sales for each year 2018-2020. This percentage represents how much of total revenue the business still has after paying for costs of goods sold. What does the change in gross profit from year to year say about this business? 3. The owner of Montana Furniture Design is worried about the economy. Specifically, she knows that it has become more difficult to buy and receive materials quickly. In order to avoid future issues, she's decided to buy materials of about $1,000,000 at the end of the year (2021) to keep in inventory for next year's production. Will this impact her net income for 2021? If so, how? 4. The owner of Montana Furniture Design would like to expand to several other states. To do this, she hopes to get outside funding. She wants to show her 2021 financials to a potential lender. Will this impact advice you may give her about buying a significant amount of inventory at year end 2021? Why or why not? 5. You'll notice that account receivable at year end 2020 are significantly larger than they've been in the past. While assessing the financials, the lender will no doubt note this and inquire further. What are three relevant and helpful questions the lender could ask in order to determine the risk around collecting all of those receivables? (Assume each of your questions would be answered by the owner with support documentation to verify the response) 6. Montana Furniture Design is presented using Generally Accepted Accounting Principles. This requires that the financials be presented using the accrual method of accounting. If we changed the 2020 method of accounting from the accrual method to the cash method, what would the 2020 net income be? 7. You'll notice that payroll costs went up in 2020 compared to 2019. Were the additional employees hired office staff or production staff or both? If I told you there were no new employees during 2020, what would this mean in regard to the increase in payroll costs? If you're thinking about investing in this business, is it a good thing or a bad thing that no new employees were hired over the course of 20203 Why or why not?
Expert Answer:
Answer rating: 100% (QA)
The question asks to calculate the gross profit as a percentage of sales for each year from 2018 to ... View the full answer
Posted Date:
Students also viewed these accounting questions
-
Cost of Goods Sold Ivano Company has collected cost accounting information for the following subset of items for Years 1 and 2. Year 1 Year 2 tem: Direct materials used in production Direct...
-
Cost of Goods Sold is reported as an asset on the balance sheet. as a direct reduction of equity on the statement of changes in stockholders\' equity. as an addition to Sales Revenue on the income...
-
A data set has 60 observations with a minimum value equal to 30 and a maximum value equal to 72. The number of classes using the 2k2 n rule is 7. 8. 5. 6.
-
18. Equal volumes of two solutions containing 3.65g of HCl and 4.0 g of NaOH respectively are mixed. The pli of the mixture is 2) <7 3) >7 19. When Imi of 0.IN HCIIS added to 1 litre of a solution of...
-
On May 1, American Gold Exchange paid cash of $ 54,000 for computers that are expected to remain useful for three years. At the end of three years, the value of the computers is expected to be zero....
-
You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Kishs beta coefficient can be found as a weighted average of its stocks betas. The...
-
The following costs were incurred for the month of June for the Process A23 Department. Use this information to prepare a responsibility report for the month of June. Budget Actual Sales in units.....
-
An article in a trade journal reports that nationwide 28% of liquor purchases are made by women. If B & B Liquors proportion of sales to women is significantly different from the national norm, the...
-
With fixed costs of $10,000/month and variable costs of $10/unit, AAA Corp reported a monthly profit of $5,000 at a volume of 5,000 units. The selling price was: A. $30 B. $40 C. $50 D. $60
-
MY Autobody's adjusted trial balance on December 31, 2023, appears in the work sheet as follows: No 101 Cash Shop supplies Account 124 128 Prepaid insurance 167 Equipment 168 Accumulated...
-
Which of the following statements are true about VoIP? I. VoIP traffic is transported over the circuit-switchedtelephone network. II. VoIP has enhanced the prominence of circuit-switchingtechnology....
-
Loc weighs 14 pounds. The HCP prescribes an IV infusion of 5% dextrose in normal saline to be infused at 8 mL/kg/hr. How many milliliters of the prescribed solution should the nurse infuse each...
-
Create the CM cg versus a plot a. List the aircraft you have been using for the previous assignments. List the wing area and the average wing chord. We will use the average wing chord as the...
-
Calculate the cost of debt for a hypothetical private firm (market interest rate) under the following circumstances. (8pts) Real interest rate= 1% Inflation expectation = 2% Default risk=5%...
-
You need to borrow $10,000,000 on your line of credit to cover increased working capital expense due to sales growth. Bank A is willing to lend to you at 5.25% with 10% compensating balances. Bank B...
-
According to this excerpt, "Proponents of judicial elections argue that this method of selection is the most democratic, allowing the people to have a direct voice in selecting judges. They believe...
-
For this activity, please take 1 screenshot or photo of a recent scientific poll or scientific study that was conducted. By "scientific" - I mean a form of random probability sampling was used -...
-
What are conversion costs? What are prime costs?
-
Donald Winn and Judy Reed agreed to liquidate their partnership on June 30 of the current year. On that date, after financial statements were prepared and closing entries were posted, the general...
-
Theresa Doran and Roy Eden are partners in a business called D & E Sales. The partnership's work sheet for the year ended December 31 of the current year is provided in the Working Papers. ...
-
Brian Hughes and Wendy Perez formed a partnership five years ago. The partnership has been very successful and is growing rapidly. The partners are evaluating future actions for the next five years....
Study smarter with the SolutionInn App