3 March 31, 2020. Crocs had given away $1.7 million of Inventory. In the following quarter. Crocs reported giving away $8.2 million more shoes, after it expanded its donation programs to include delivery drivers and line cooks. In total, when these programs ended May 29,2020. Crocs had given away $9.9 million worth of shoes. t 3 of 4 ts Crocs, Incorporated Income Statements For the three months ended June 30 (in millions) Sales revenue Cost of goods sold Gross profit Selling, general, and administrative expenses Income from operations Other expense (incone) Income before income taxes Income tax expense (benefit) Net income 2e2e $ 331.5 151.6 179.9 123.3 56.6 1.9 54.7 (1.9) $ 56.6 2019 $ 358.9 169.5 189.4 141.5 47.9 3.2 44.7 5.5 $ 39.2 eBook Print ferences Where are Inventory donations such as these reported in companies' financial statements? Are they included in Cost of Goods Sold? That's where Crocs reports other Inventory-related expenses such as write-downs and the costs to design. produce, procure, and ship its footwear. Or, are they reported as a cost of promoting the company's business, similar to advertising expenses? Publicly-traded companies rarely mention where their donations are reported, because either the amounts are too small to justify separate reporting or the companies don't want to risk being blamed for over-producing in a world increasingly concerned about environmental sustainability. Whatever the reason, donations are almost never called-out in financial statements, even when they benefit others. For example, Ralph Lauren Corporation's 10-Q sald nothing about the company's donation of 1.5 million apparel products to support front line workers and families in May 2020.2 Likewise. Guess?, Incorporated did not discuss its donation of 45.000 clothing items during the pandemic, nor did The Gap mention Its $60 million donation of unsold apparel, which was somewhat overshadowed by the company's $235 million Inventory write-down. Crocs is the rare exception. Although its Income statement (shown above) does not separately Identify its Inventory donation, the notes to the financial statements for the quarter ended June 30, 2020, report that $8.2 million was included In Selling. General, and Administrative Expenses. The company's Inventory donations in the previous year were not material." so we can't say whether Crocs' choice of classification in 2020 was normal or (dare we say it?) unprecedented. All amounts and personing in this reading certaining a Crses are based on cista regened by Crews, linsergerete, in ita Fera 10-0 fer the series and 30, 2020. dewelded samasse On Osteber 10, 2020 PANS Charity wera: Michael Kera denta $35M in predeta te Delivering Goed mer Festnear Newa, Jee 12, 2020, dennleaded Osebe 12. 2020. frem allesticarnewa.com 2020 cc.alghilanthrysanies industry-chris-centin-nan-may-2020-202072015. elten, Matthew. "What happens to all of our tear Wall Street Journal Aug-2 12,2020 downloaded October 12, 2020, frambuca www.wasamalea featest Gates-what-is-cs-with-alessunasis-lethes-11597328525 Calculate the gross profit percentage for Crocs, using the financial results shown for the three-month period ended June 30, 2020. Enter the components of your calculation below and show your response as a percentage. a. What is the 2020 gross profit percentage? (Round the final answers to 1 decimal place.) Gross profit percentage = (Net Sales - CGS = 1 (Net Sales) = 1 b. Is this better or worse than the same period in 2019. when the gross profit percentage was 52.8%? This is than the gross profit percentage Crocs reported for this period in 2019 Prey AA HH! Neyt>