Question 1 Week 6 - Accounting Practice Question PDF

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Question 1 Week 6 - Accounting Practice Question, awnser sheet...

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1. A) Horizontal Sales Revenue = 11.6%increase Cost of Goods Sold = 41.2% increase Gross Profit = (18.0%) decrease Selling Expenses = 18.3% increase Administrative expenses = (10.1%) decrease Finance Expenses = (200%) decrease Profit before income tax expense = (41.4%) decrease Income tax expense = (41.4%) decrease Profit after income tax expense = (41.4%) decrease Vertical Sales Revenue = 100% Cost of Goods Sold = 63.2% Gross Profit = 36.8% Selling Expenses = 12.6% Administrative expenses = 9.2% Finance Expenses = 1.2% Profit before income tax expense = 12.8% Income tax expense = 4.1% Profit after income tax expense = 9.6% B)Monica Flamingo Farms has changed significantly in 1 year. Sales revenue has slightly increased, however gross profit decreased due to the increase in cost of goods sold. Most expenses decreased with an exception for selling expenses increasing, due to the increased sales of inventory/service driving up the expense. Although the decrease in many expenses, profits reluctantly decreased due to the high increase of cost of goods sold which substantially affects profits to lower. Cost of goods sold plays a pivotal role evident in the vertical analysis as it takes up 63.2% of sales, higher than any other aspect. All inclusive Monica Flamingo Farms has slightly decreased its profits due to ts cost of goods sold increasing, masking any positive decrease in other expenses. C) Monica Flamingo Farms Statement of Retained Earnings For the year ended June 30 2020 Retained earnings, July 1 +Net profits - Drawings (dividends) Retained earnings, June 30

58 000 74 200 37 000 95 200

D)Although profits year ending in 2019 were 126 700, but retained earnings were 58 000 this is due to drawings that may have occurred. This includes drawings from profits which would be in the form of dividends to investors and stakeholders so they obtain their respective share of the business profits. Thus retained earnings in July 2019 were lower due to dividend drawings....