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Comparative Analysis — BTN 4-2
1.
Apple
Google
($ millions)
Current
Prior
Current
Prior
Net sales ..................
$170,910
$156,508
$59,825
$50,175
Cost of sales ............
106,606
87,846
25,858
20,634
Gross margin ...........
$ 64,304
$ 68,662
$33,967
$29,541
Gross margin ratio ....
37.6%
43.9%
56.8%
58.9%
2. In both years, Google’s gross margin ratio was higher than that for
Ethics Challenge — BTN 4-3
1. A few students sometimes feel that Amy has devised a clever way to
beat the system. She appears to be succeeding in getting something for
free. However, most students fortunately feel that Amy is abusing the
system and that her ethical conduct needs an overhaul. The instructor
Ethics Challenge, BTN 4-3 — (Concluded)
2. The merchandising company accounts for sales returns using a contra
revenue account called Sales Returns and Allowances. A dress
returned with a sales bill of $200 would be accounted for as follows:
Sales Returns and Allowances ............... 200
Accounts Receivable ..................... 200
know your investment in security has paid off. Let me explain.
We maintain a perpetual inventory system, which continuously updates
inventory account balances as goods are purchased, sold, and returned.
At the end of each accounting period, we take an actual physical inventory
and compare this amount to our inventory records. These accounting
Taking It to the Net — BTN 4-5
Fiscal Year ($ thousands)
2012
2013
2014
Net sales ................................
$1,721,750
$2,227,717
$2,428,257
Cost of goods sold ..........................
1,042,197
1,240,989
1,422,143
Gross margin ................................
$ 679,553
$ 986,728
$1,006,114
Gross margin ratio ..........................
39.5%
44.3%
41.4%
Analysis: J. Crew’s gross margin ratio improved from 39.5% in 2012 to
44.3% in 2013, but declined to 41.4% in 2014. Its net sales increased in
Teamwork in Action — BTN 4-6
1.
a. Net sales computation
Sales ............................................................................ $600,000
Less: Sales discounts ............................................. $ 13,000
Sales returns and allowances ...................... 20,000 33,000
Net sales ..................................................................... $567,000
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Financial and Managerial Accounting, 6th Edition
304
Teamwork in Action (Concluded)
e. Net income computation
Gross profit from sales (from d) ............................... $191,000
Operating expenses (given) ...................................... 50,000
Net income .................................................................. $141,000
2. Net income is $141,000.
3. The inventory account balance is $84,000. If actual (physical) inventory
is $76,000, an $8,000 loss from inventory shrinkage occurred. This
Entrepreneurial Decision — BTN 4-7
1.
Sseko Designs
Forecasted Income Statement
For Year Ended January 31, 2015
2. The proposal yields a forecasted net income of $213,100. This compares
3. There are many issues that should be considered. Among them are:
First, there is the issue of the prediction itself. That is, are estimates
reasonable or could reality be markedly different from these estimates?
Second, and related to the first, there is a need to consider “ranges” of
possible scenarios since the future is unpredictable. This would involve
Hitting the Road — BTN 4-8
There is no formal solution for this field activity. As the discussion
facilitator, the instructor should try to develop a sense of how willing retail
managers are in granting sales allowances, the range of return policies
employed, and strategies managers use to stem return abuses.
Global Decision — BTN 4-9
1.
(in millions)
Samsung*
Apple
Google
Net sales ................................
₩228,692,667
$170,910
$59,825
Cost of sales ................................
137,696,309
106,606
25,858
Gross margin ................................
₩ 90,996,358
$ 64,304
$33,967
Gross margin ratio ...........................
39.8%
37.6%
56.8%
*millions of Korean won
Gross Margin %
Rank
Google .....................................
56.8%
1
Samsung ................................
39.8%
2
Apple .......................................
37.6%
3
2. Samsung, Apple and Google each use the multiple-step format for their
income statements. Google’s income statement is a mix between
