From the scrambled list of items presented in Table 4, prepare an income statement Dooley Sportswear Company

 The company's gross profit margin is EBIT divided by net sales.

Answer:  FALSE

                                                                  Table 4

                 Financial Data for Dooley Sportswear, December 31, 2013

                                Inventory                                            $206,250

                                Interest expense                                       5,000

                                Accumulated depreciation             442,500

                                Cash                                                       180,000

                                Net sales (all credit)                       1,500,000

                                Accounts receivable                          225,000

                                Operating expenses                           525,000

                                Cost of goods sold                              937,500

                                Accounts payable                              168,750

                                Prepaid insurance                                80,000

                                Accrued wages                                      65,000

                                Federal income taxes                             5,750

From the scrambled list of items presented in Table 4, prepare an income statement Dooley Sportswear Company.  Not all items from Table 4 will be used.

Answer:                 Dooley Sportswear Company Income Statement

                                          for the Year Ending December 31, 2013

                                Net sales (all credit)                             $1,500,000

                                Cost of goods sold                                      937,500

                                Gross profits                                                562,500

                                EBIT                                                                525,000

                                Net operating income                                 37,500

                                Interest expense                                               5,000

                                Net income before taxes                             32,500

                                Federal income taxes                                     5,750

                                Net income                                                   $26,750