If the Petty Cash Fund is not replenished on the balance sheet ...

[EAugust]

If the Petty Cash Fund is not replenished on the balance sheet date,
 a. income will be understated.
   b. both assets and liabilities will be understated.
   c. assets will be understated.
   d. liabilities will be overstated.
   e. both assets and income will be overstated.

Question 2

Use the following information to analyze BobKat Equipment Sales. Calculate any profit measures deemed necessary in order to discuss the profitability of the company.
  BobKat Equipment Sales
  Income Statement
  For the Years Ended Dec.
 
  31, 2015 and 2014
 
   2015 2014
   Net sales 124,000 138,000
   COGS 90,000 95,000
   Gross profit  34,000  43,000
   General and administrative expenses 31,000 36,000
   Operating profit  3,000  7,000
   Interest expense (1,000) (1,000)
   Earnings before taxes  2,000  6,000
   Income taxes 800 1,800
   Net income  1,200  4,200
 
 
 What will be an ideal response?

[dpost18]

Answer to Question 1

e

Answer to Question 2

2015 2014
Cost of goods sold percentage 72.6 68.8
Gross profit margin 27.4 31.2
G&A/Net sales 25.0 26.1
Operating profit margin 2.4 5.1
Effective tax rate 40.0 30.0
Net profit margin 1.0 3.1

The COGS percentage has increased causing gross profit margin to decline. Either prices of the products have decreased or cost of goods sold has increased and management has been unable to pass on the cost in the form of higher selling prices. General and administrative expenses havebeen cut, but not enough to mitigate the change in gross profit margin.This has resulted in a declining operating profit margin. The dollar amount of interest expense remained unchanged. Despite declining profits, BobKat's effective tax rate has increased 10 and caused further decline in the net profit margin.

[EAugust]

Correct answers!

[dpost18]

Great! Please up vote