Additional information. Requirements for Case study 5-1. Preparing a multi-step income statement (10 marks). Journalizing closing entries (30 marks). Computing and analyzing gross profit percentage (30 marks)

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Additional information

Ø 46% is gross profit percentage of Budget Business Systems in 2014 (previous year)

Ø industry average is 45% this year (gross profit percentage)

Ø main competitor's is 44% this year (gross profit percentage)

Requirements for Case study 5-1

1. Preparing a multi-step income statement (10 marks)

Prepare Budget’s multi-step income statement for the year ended March 31, 2015.

2. Journalizing closing entries (30 marks)

a) Journalize the required closing entries at March 31, 2015.

b) Set up T-accounts for Income Summary; Bitzes, Capital; and Bitzes, Withdrawals. Post the closing entries to the T-accounts and calculate their ending balances.

c) How much was Budget’s net income or net loss?

3. Computing and analyzing gross profit percentage (30 marks)

a) Calculate net sale revenue, gross profit and gross profit percentage step by step.

b) Measure the profitability of the Budget Business Systems. (not less than 250 words)

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