Wood Work Inc. and Modern Furniture Ltd. are two large home furnishing retailers, selling a wide range of furniture, major appliances, and home electronics. The following data were taken from the 2014 annual reports of both companies (amounts in thousands of Canadian dollars):

Required:
1. Based on these data, prepare a multiple- step statement of earnings for each company for the year ending December 31, 2014 (showing both gross profit and earnings from operations).
2. Compute the gross profit and the gross profit percentage for each company. Explain what these two numbers mean. What do you believe accounts for the difference between the gross profit percentages of both companies?

Transcribed Image Text:

Wood Work $1,341,080 15,189 2,443 511,897 748,047 34,272 2,317 120.8 Modern Fumiture Sales revenue Income taxes expense Cash dividends daclared Operating expenses Cost of sales Finance expense fincome), net Other income Number of common shares outstanding (in milions) $692,183 16,901 28,047 223,126 398,704 3,350) 70.0