The following information was developed from the financial statements of Free Time, Inc. At the beginning of

Question:

The following information was developed from the financial statements of Free Time, Inc. At the beginning of 2021, the company’s former supplier went bankrupt, and the company began buying merchandise from another supplier.

Instructions.
a. Compute the net sales for each year.
b. Compute the cost of goods sold in dollars and as a percentage of net sales for each year.
c. Compute operating expenses in dollars and as a percentage of net sales for each year. (Income taxes expense is not an operating expense.)
d. Prepare a condensed comparative income statement for 2021 and 2020. Include the following items: net sales, cost of goods sold, gross profit, operating expenses, income before income tax, income tax expense, and net income. Omit earnings per share statistics.
e. Identify the significant favorable and unfavorable trends in the performance of Free Time, Inc. Comment on any unusual changes.

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Financial And Managerial Accounting The Basis For Business Decisions

ISBN: 9781260247930

19th Edition

Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello

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