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Compute net sales, cost of goods sold, operating expenses

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30.
The following information was taken from the financial statements of Adam Company:

2007 2006
Gross profit on sales $700,000 $765,000
Income before income taxes 230,000 221,000
Net income 160,000 153,000
Net income as a percentage of net sales 12% 11%

Instructions

(a) Compute the net sales for each year.
(b) Compute the cost of goods sold in dollars and as a percentage of net sales for each year.
(c) Compute operating expenses in dollars and as a percentage of net sales for each year. (Income taxes are not operating expenses).

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The solution explains the calculation of net sales, cost of goods sold and operating expenses.

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(a) Net Income as a percentage of sales = Net Income/Net Sales
Net Sales = Net Income/Percetage
2007 - Net Sales = 160,000/.12 = 1,333,333
2006 - Net Sales = 153,000/.11 = 1,390,909

(b) Gross ...

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