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#3 disregard Heartstrings and Decision Case

Heartstrings Music Company Trial Balance February 29, 2018 Account Cash Accounts receivable Inventory Supplies Furniture Accu

Accounting 1 Handouts $12.700 Interest Revenue Merchandie Inventory Notes Payable long term Salaries Payable Net Sales Revenu

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Answer #1
R1 Journal of heartstring Closing Entries
Details debit($) Credit($)
Sales Revenue        1,65,000
Income Statement 1,65,000
Income Statement        1,22,300
Sales Return         7,400
Cost of goods sold      78,000
Selling Expenses      22,000
General Exp      12,500
Interest Expenses         2,400
Net of Income Statement
Income Statement            42,700
Retained Earnings      42,700
Retained Earnings            42,200
Dividend      42,200
R2 Single Step Income Statement
Sales Revenue 1,65,000
Less - Total Expenses
Sales Return              7,400
Cost of goods sold            78,000
Selling Expenses            22,000
General Exp            12,500
Interest Expenses              2,400
Total Expenses 1,22,300
Net Profit      42,700
R3 Calculate Gross Profit
Sales Revenue        1,65,000
Less - Sales Return              7,400
Net Sales -b 1,57,600
Cost of goods sold      78,000
Gross Profit-a      79,600
Gross Profit % (a/b) 51%
Average Inventory
Opening inventory            12,800
Closing inventory            16,000
Average Inventory            14,400
($12800+$16000)/2
Cost of goods sold            78,000
Inventory turnover                 5.42

R4 _ No Change in GP % + Inventory Turnover  

Fram Quality Steak Company - Quarter ended April 30 , 2018
Need to prepare Multi Step Income Statement
For the year ended April 30, 2018
Details Amnt($) Amnt($)
Net Sales Revenue        2,98,000
Less
Cost of goods sold        1,54,960
Gross profit        1,43,040
Gross profit % 48%
Less- Operating Expenses
Rent Expenses      15,100
Salary Expenses         6,000
Utility Expenses      10,000
Delivery Expenses         3,800
Admin cost
Salary Expenses         2,000
Depreciation Exp         1,320
Utility Expenses         4,600
Rent Expenses         7,100
Total Operating Expenses            49,920
Inetrest Expenses       -2,100
Inetrest Revenue            400             -1,700
Income before Tax            91,420
Fisher , owner of the company , planing to have Gross Profit 50%
But as per above calculation Gross profit 48% , which not achieved
Target Plan GP%
Existing ($) Projected$
Revenue        3,75,000        1,12,500
Additional Advertisement cost increase in Revenue by 30%
Existing Revenue        3,75,000
30% additional Revenue        1,12,500
($375000*30%)
Cost of Goods Sold
Existing        1,85,000
30% additional            55,500
($185000*30%)
Single Step Income Statement
Plan A Existing ($) Projected$ Total$
Revenue        3,75,000        1,12,500 4,87,500
Less
Cost of Goods Sold        1,85,000            55,500 2,40,500
Selling Expenses            60,000            25,000      85,000
General Exp            30,000      30,000
Net Profit        1,00,000            32,000 1,32,000
Plan B Existing ($) Projected$ Total$
Revenue        3,75,000            52,500 4,27,500
Less
Cost of Goods Sold        1,85,000            26,250 2,11,250
Selling Expenses            60,000              5,000      65,000
General Exp            30,000                     -        30,000
Net Profit        1,00,000            21,250 1,21,250
Revenue Proposed as per Question
Sales Unit                  750
rate $/ Unit                    70
Projected$            52,500
Cost of goods Sold
Unit                  750
rate $/ Unit                    35
Projected$            26,250
Plan A giving More Net Profit as compared with Plan B
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