Question
The following are account balances of GadgetsCom Pty, Ltd., a company selling gadgets, at the end of financial year 20X1 Accounts ($000) Cash at bank
The following are account balances of GadgetsCom Pty, Ltd., a company selling gadgets, at the end of financial year 20X1
Accounts
| ($000) |
Cash at bank | 168 |
Inventory | 600 |
Accounts receivable | 450 |
Land | 1,516 |
Buildings &Equipment | 2,169 |
Accumulated depreciation | 350 |
Accounts payable | 900 |
Notes payable (due in 12 months) | 250 |
Bank loan | 2,000 |
Share capital | 866 |
Retained earnings (Ending Balance) | 537 |
Sales | 5,500 |
Cost of goods sold | 2,100 |
Finance costs | 250 |
Sales salaries expense | 425 |
Sales utilities expenses | 35 |
Office salaries expense | 825 |
Office utilities expenses | 125 |
Depreciation expense | 100 |
Income Tax | 492 |
Required: for GadgetsCom Pty, Ltd.:
a. Prepare a classified Income Statement (11 marks)
b. Incorporating the additional information below, calculate the Gross Profit Margin (GPM) and the Profit Margin (PM) ratios and provide your comment on the companys profitability and efficiency. (6 marks)
c. Prepare the Non-current Assets section of the Balance Sheet. (3 marks)
Additional Information
The manager was pleased with the increased sales revenue in the current year. Last years ratios are GPM 55% and PM 23%. The following are ratio formula used by the company:
Ratio | Method of calculation |
Gross Profit Margin | Gross Profit x 100 = x% Sales revenue |
Profit Margin | Profit After Tax x 100 = x% Sales revenue |
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