Question
Suppose in its income statement for the year ended June 30, 2022, The Clorox Company reported the following condensed data (dollars in millions). Salaries and
Suppose in its income statement for the year ended June 30, 2022, The Clorox Company reported the following condensed data (dollars in millions).
Salaries and wages expenses | $ 460 | Research and development expense | $ 114 | |||
---|---|---|---|---|---|---|
Depreciation expense | 90 | Income tax expense | 430 | |||
Sales revenue | 5,830 | Loss on disposal of plant assets | 46 | |||
Interest expense | 161 | Cost of goods sold | 2,800 | |||
Advertising expense | 499 | Rent expense | 105 | |||
Sales returns and allowances | 230 | Utilities expense | 60 |
Assume a tax rate of 34%.
(a)
Prepare a multiple-step income statement. (Round answers to 0 decimal places, e.g. 15,222.)
(b)
Calculate the gross profit rate and the profit margin. (Round answers to 1 decimal place, e.g. 15.2%.)
Gross profit rate | enter percentages rounded to 1 decimal place | % | |
---|---|---|---|
Profit margin | enter percentages rounded to 1 decimal place | % |
c) Assume the marketing department has presented a plan to increase advertising expenses by $340 million. It expects this plan to result in an increase in both net sales and cost of goods sold of 30%. (Hint: Increase both sales revenue and sales returns and allowances by 25%.) Redo parts (a) and (b) and discuss whether this plan has merit. (Assume a tax rate of 34%, and round all amounts to whole dollars.)
d) Calculate the gross profit rate and the profit margin. (Round answers to 1 decimal place, e.g. 15.2%.)
Gross profit rate | enter percentages rounded to 1 decimal place | % | |
---|---|---|---|
Profit margin | enter percentages rounded to 1 decimal place | % |
Prepare a multiple-step income statement. (Round answers to 0 decimal places, e.g. 15,222.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started