In 2020, Matt Cruz Company had net sales of $900,000 and cost of goods sold of $522,000.

Question:

In 2020, Matt Cruz Company had net sales of $900,000 and cost of goods sold of $522,000. Operating expenses were $225,000, and interest expense was $11,000. Cruz prepares a multiple-step income statement.

Instructions

a. Compute Cruz's gross profit.
b. Compute the gross profit rate. Why is this rate computed by financial statement users?

c. What is Cruz's income from operations and net income?

d. If Cruz prepared a single-step income statement, what amount would it report for net income?

e. In what section of its classified balance sheet should Cruz report inventory?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

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