MGAB01H3 Chapter 5.4: Chapter 5.4

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ochretortoise616

1 Nov 2010

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MGAB01H3 Full Course Notes

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The single-step statement of earnings only does one thing: subtract total expenses from total revenues before income taxes. Multiple-step statement of earnings shows all the steps required in arriving to the net earnings total. All data is categorized under revenue and expenses. The multiple-step statement of earnings shows five main steps: (1) net sales (2) gross profit (3) earnings from operations (4) non-operating activities (5) net earnings. Net sales = sales j sales returns and allowances j sales discounts. Gross profit = net sales j cost of goods sold. Earnings from operations = gross profit j operating expenses. Sometimes operating expenses are divided into two categories: selling and administrative. Selling is associated with making sales (i. e. advertising or salaries) and administrative are general operating activities (i. e. accounting or legal). Non-operating activities consist of other revenues and expenses that are unrelated to the companys main operations. Special gains or losses are also reported here.

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The following information has been reported by Laporte Inc. on its statements of financial position at December 31, 2016 and 2017, and on its statement of earnings for the year ended December 31, 2017. Amounts are in millions of dollars:

Statements of Financial Position

Merchandise inventory

Long-term investments

Property, plant, and equipment

232

190

Accumulated depreciation

Total liabilities and shareholdersâ equity

342

272

Statement of Earnings

Other operating expenses

(40.0

)

Earnings from operations

18.0

Gain on sale of investments

Loss on sale of equipment

(14

)

Earnings before income tax

Additional information is as follows:
a.	Old equipment was disposed of for cash during 2017. It had an original cost of $52 and an accumulated depreciation of $40.
b.	A new building was acquired during the year in exchange for a long-term note for $60, payable in five years. In addition, new equipment was purchased for cash.

Required:
1.	Prepare a statement of cash flows for Laporte Inc. for the year ended December 31, 2017 by using the direct method. (Negative answers should be indicated by a minus sign. Enter your answers in millions.)

limemouse936

i have to read these following income statements and write a paragraph on it.

Your Company Name here
CONDENSED MULTISTEP INCOME STATEMENT
	Date

	Most recent year	Year	Year
($ in millions)
	12/31/16	12/31/15	12/31/14
Sales Revenue	41,490,000.00	39,678,000.00	36,918,000.00
Cost of Goods Sold	6,933,000.00	6,638,000.00	6,262,000.00
Gross Profit	34,557,000.00	33,040,000.00	30,656,000.00
Operating Expenses	28,359,000.00	27,075,000.00	25,091,000.00
Operating Income	6,198,000.00	5,965,000.00	5,565,000.00
Nonoperating revenues and expenses	1,388,000.00	1,388,000.00	1,388,000.00
Income before Income tax	4,810,000.00	4,577,000.00	4,177,000.00
Provision for Income tax	1,378,000.00	1,261,000.00	1,108,000.00
Income from continuing operations	3,432,000.00	3,316,000.00	3,069,000.00
Nonrecurring items	542,000.00	1,187,000.00	1,194,000.00
NET INCOME	2,890,000.00	2,129,000.00	1,875,000.00
Earnings per share	7.3	4.99	4.16



Your Company Name here
CONDENSED TREND ANALYSIS INCOME STATEMENT
	Date

	Most recent year	Year	Year
($ in millions)
	2016	2015	2014
Sales Revenue	112.38%	107.48%	100.00%
Cost of Goods Sold	110.72%	106.00%	100.00%
Gross Profit	112.73%	107.78%	100.00%
Operating Expenses	113.02%	107.91%	100.00%
Operating Income	111.37%	107.19%	100.00%
Nonoperating revenues and expenses	100.00%	100.00%	100.00%
Income before Income tax	115.15%	109.58%	100.00%
Provision for Income tax	124.37%	113.81%	100.00%
Income from continuing operations	111.83%	108.05%	100.00%
Nonrecurring items	45.39%	99.41%	100.00%
NET INCOME	154.13%	113.55%	100.00%
Earnings per share	175.48%	119.95%	100.00%



Your Company Name here
CONDENSED COMMON SIZE INCOME STATEMENT
	Date

	Most recent year	Year	Year
($ in millions)
	2016	2015	2014

Sales Revenue	100.00%	100.00%	100.00%
Cost of Goods Sold	16.71%	16.73%	16.96%
Gross Profit	83.29%	83.27%	83.04%
Operating Expenses	68.35%	68.24%	67.96%
Operating Income	14.94%	15.03%	15.07%
Nonoperating revenues and expenses	3.35%	3.50%	3.76%
Income before Income tax	11.59%	11.54%	11.31%
Provision for Income tax	3.32%	3.18%	3.00%
Income from continuing operations	8.27%	8.36%	8.31%
Nonrecurring items	1.31%	2.99%	3.23%
NET INCOME	6.97%	5.37%	5.08%
Earnings per share	0.00%	0.00%	0.00%

maroonporpoise912

In its income statement for the year ended December 31, 2010, MarisCompany reported the following condensed data.

Administrative expense $435,000 Selling expenses $490,000
Cost of goods sold 987,000 Loss on sale of equipment 83,500
Interest expense 68,000 Net sales 2,050,000
Interest revenue 65,000 Income tax expense 20,000

(a) Complete the multiple-step income statement below. (Listmultiple entries from largest to smallest amounts, e.g. 10, 5,1.)

MARIS COMPANY
Income Statement

$

Gross profit
Operating expenses
$

Total operating expenses

Income from operations
Other revenue and gains

Other expenses and losses
$

Income before income taxes

Net income
$

(b) Calculate the profit margin ratio and the gross profit rate.(Round to three decimal places, e.g. 0.444.)

Profit margin ratio
Gross profit rate

coralyellowjacket724

MGAB01H3 Chapter 5.4: Chapter 5.4

MGAB01H3 Full Course Notes

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