The adjusted trial balance of Foster Products Company included the following balances for 12- 31-15, which...

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Accounting

The adjusted trial balance of Foster Products Company includedthe following balances for 12- 31-15, which was the first year ofoperations
Accounts Payable $ 18000
Accumulated Depreciation 35000
Advertising Expense 17800
Cash 7400
Common Stock 3000
Cost of Goods Sold 75800
Depreciation Expense 3000
Dividends 2000
Equipment 81800
Insurance
Expense 2800
Interest Revenue 500
Inventory 24000
Prepaid Insurance 3800
Rent Expense 26000
Retained Earnings 40000
Salaries Expense 63000
Sales 226600
Sales Discounts 1000
Sales Returns and Allowances 5000
Supplies 3700
Supplies Expense 6000
________
323100 323100
Rent expense and salaries expense are equally divided betweenselling activities and general and administrative activities.
Required:
1. Prepare a Multiple Step Income Statement for 12-31-15.(Categorize the Operating Expenses into Selling Expenses andGeneral/Administrative Expenses.
2.Calculate the Following Ratios AND provide a briefinterpretation about each one.
a. Return on Assets
b. Gross Margin Ratio
c. Profit Margin

Answer & Explanation Solved by verified expert

4.0 Ratings (560 Votes)

Income statement Particulars Amount Amount Revenue Sales 22660000 Less Sales returns and allowances 500000 Net sales 22160000 Less Cost of goods sold 7580000 Gross profit 14580000 Add Interest revenues 50000 A Revenue See Answer

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The adjusted trial balance of Foster Products Company includedthe following balances for 12- 31-15, which was the first year ofoperationsAccounts Payable $ 18000Accumulated Depreciation 35000Advertising Expense 17800Cash 7400Common Stock 3000Cost of Goods Sold 75800Depreciation Expense 3000Dividends 2000Equipment 81800InsuranceExpense 2800Interest Revenue 500Inventory 24000Prepaid Insurance 3800Rent Expense 26000Retained Earnings 40000Salaries Expense 63000Sales 226600Sales Discounts 1000Sales Returns and Allowances 5000Supplies 3700Supplies Expense 6000________323100 323100Rent expense and salaries expense are equally divided betweenselling activities and general and administrative activities.Required:1. Prepare a Multiple Step Income Statement for 12-31-15.(Categorize the Operating Expenses into Selling Expenses andGeneral/Administrative Expenses.2.Calculate the Following Ratios AND provide a briefinterpretation about each one.a. Return on Assetsb. Gross Margin Ratioc. Profit Margin