The data is extracted from the books of Mystery Mountain Lodge at December 31, 2001: Sales                                                    ?          Cost of Goods Sold            145% of Gross profit            Gross Profit                                          200000 Operational Expenses                            ?          Operational Income                               50000   Interest Expense                                    ?          Income before Income Tax                    ? Income Tax (40%)                                18000 Income                                                 27000 Required: Calculate the missing values

Solution :-

Given data are

Gross profit = 200000

operational income = 50000

income tax ( 40 % ) = 18000

income = 27000

cost of goods sold = 145 % of gross profit

= 200000 * 145%

= 290000

Sales = Cost of goods sold + gross profit

= 290000 + 200000

= 490000

Operational Expenses = Gross profit - operational income

= 200000 - 50000

= 150000

Income before income tax = Income + Income tax (40%)

= 27000 + 18000

= 45000

Interest expense = operational income - income before income tax  

= 50000 - 45000

= 5000

Statement of earnings and common size analysis

Comment :-

By the help of statement of earnings and common size analysis we can see that a major portion of our costs in operational expenses around 30.61% of sales reduces our income , so we have to take effective control in this area to enhance the income for potential growth of the organization.