O’Sullivan’s had gross sales of $740,000 with returns of $43,400. The inventory on January 1 was $400,000, and the cost of goods purchased during the year was $300,000. Freight costs during the year were $13,600. Total inventory on December 31 was $510,000. Salaries and wages totaled $125,200, rent was $33,000, advertising was $15,500, utilities were $13,700, taxes on inventory and payroll were $5,600, and miscellaneous expenses totaled $19,400. Income taxes were $24,500.
1. Find the Net Sales.
2. Find the Total Cost of Goods Purchased.
3. Find the Total of Goods Available for Sale.
4. Find the Cost of Goods Sold.
5. Find the Gross Profit.
6. Find the Total Expenses.
7. Find the Net Income Before Taxes.
8. Find the Net Income After Taxes.
Referring back to Part 2 and the income statement for O’Sullivan’s, consider O’Sullivan’s current level of profitability and answer the following questions.
What are their largest expenses constraining their overall net income?
If you were running this firm, what might you do to increase profitability?
What factors could further decrease profitability?
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