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
