Question

E5-11 (Algo) Inferring Income Statement Values LO5-3 Supply the missing dollar amounts for the current year income statement of BGT Company for each of the following independent cases. (Input all amounts as positive values.) Case B Case A $ 850 Case C Case D $ 770 125225 Case E $ 1,090 332 810 650 Sales revenue Cost of goods sold Gross margin Selling expense Administrative expense Pretax income Income tax expense Net income 110 6070i 160 100 Pre of 13 Next >

Answer 1

The proforma goes as below

         Sales

Less Cost of Goods Sold

      = Gross Margin

Less Selling Expenses

Less Administrative Expenses

        = Pre Tax Income

Less Income Tax Expense

         = Net Income

Case A

For this case let us come from bottom to top

Net Income = Pre Tax income - Income Tax Expense

$130 = Pre Tax income - $70

Pre Tax income = $130 + $70

Pre Tax income = $200

Pre Tax Income = Gross Margin - Selling Expenses - Administrative Expenses

$200 = Gross Margin - $110 - $165

Gross Margin = $200 + $110 + $165

Gross Margin = $475

Gross Margin = Sales - Cost of Goods Sold

$475 = $850 - Cost of Goods Sold

Cost of Goods Sold = $850 - $475

Cost of Goods Sold = $375

Case B

For this let us come from top to bottom

Gross Margin =    Sales - Cost of Goods Sold

$810 = Sales - $332

Sales = $810 + $332

Sales = $1142

Pre Tax Income = Gross Margin - Selling Expenses - Administrative Expenses

Pre Tax Income = $810 -$280 -$100

Pre Tax Income = $430

Also we can verify that

Net Income = Pre Tax income - Income Tax Expense

Net Income = $430 - $220

Net Income = $210 which is same as given in the question

Case C

For this case let us come from bottom to top

Net Income = Pre Tax income - Income Tax Expense

Net Income = $160 - $100

Net Income = $60

Pre Tax Income = Gross Margin - Selling Expenses - Administrative Expenses

$160 = Gross Margin - $60 - $110

Gross Margin = $160 + $60 + $110

Gross Margin = $330

Gross Margin =    Sales - Cost of Goods Sold

$330 = Sales - $125

Sales = $330 + $125

Sales = $455

Case D

For this let us come from top to bottom

Gross Margin =    Sales - Cost of Goods Sold

Gross Margin =    $770 - $225

Gross Margin =    $545

Pre Tax Income = Gross Margin - Selling Expenses - Administrative Expenses

$125 = $545 - $70 - Administrative Expenses

Administrative Expenses = $545 - $70 -$125

Administrative Expenses = $350

Net Income = Pre Tax income - Income Tax Expense

Net Income = $125 - $55

Net Income = $70

Case E

For this let us come from top to bottom

Gross Margin =    Sales - Cost of Goods Sold

$650 =    $1090 - Cost of Goods Sold

Cost of Goods Sold = $1090 - $650

Cost of Goods Sold = $440

Pre Tax Income = Gross Margin - Selling Expenses - Administrative Expenses

$355 = $650 - Selling Expenses - $155

Selling Expenses = $650 - $155 -$355

Selling Expenses = $140

Net Income = Pre Tax income - Income Tax Expense

$240 = $355 - Income Tax Expense

Income Tax Expense = $355 - $240

Income Tax Expense = $115

Below is the table. Note that answers filled are represented in Bold.

	CASE A	CASE B	CASE C	CASE D	CASE E
Sales Revenue	$850	$1142	$455	$770	$1090
Cost of Good Sold	375	332	125	225	440
Gross Margin	475	810	330	545	650
Selling Expense	110	280	60	70	140
Administrative Expense	165	100	110	350	155
Pretax Income	200	430	160	125	355
Income tax expense	70	220	100	55	115
Net Income	130	210	60	70	240