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    Case Study AUSCISE

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    sharielles /
    The bookkeeper provided closing entries showing sales of $675,000 and expenses of $750,000. This indicates the business made a profit, as revenue was higher than expenses. Calculating key ratios, the business has a 52.3% gross profit ratio, 57% operating ratio, and 55% rate of return on sales. All ratios suggest the business is profitable and operating efficiently.

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    Case Study AUSCISE

    Uploaded by

    sharielles /
    56 views2 pages
    The bookkeeper provided closing entries showing sales of $675,000 and expenses of $750,000. This indicates the business made a profit, as revenue was higher than expenses. Calculating key ratios, the business has a 52.3% gross profit ratio, 57% operating ratio, and 55% rate of return on sales. All ratios suggest the business is profitable and operating efficiently.

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    Case-Study-AUSCISE

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    The bookkeeper provided closing entries showing sales of $675,000 and expenses of $750,000. This indicates the business made a profit, as revenue was higher than expenses. Calculating key ratios, the business has a 52.3% gross profit ratio, 57% operating ratio, and 55% rate of return on sales. All ratios suggest the business is profitable and operating efficiently.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    56 views2 pages

    Case Study AUSCISE

    Uploaded by

    sharielles /
    The bookkeeper provided closing entries showing sales of $675,000 and expenses of $750,000. This indicates the business made a profit, as revenue was higher than expenses. Calculating key ratios, the business has a 52.3% gross profit ratio, 57% operating ratio, and 55% rate of return on sales. All ratios suggest the business is profitable and operating efficiently.

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    © All Rights Reserved
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    of 2

    Name: ____________________________ Date: ____________

    CASE STUDY
    1. The bookkeeper of Asia Lumber Company gave you the following closing entries:
    Sales 675,000
    Purchase Returns & Allowances 2,400
    Interest Income 600
    Income & Expense Summary 678,000
    To close the credit balances of the nominal
    accounts.
    Income & Expense Summary 750,000
    Sales Returns & Allowances 33,750
    Merchandise Inventory, January 1 171,250
    Purchases 300,500
    Freight In 4,700
    Sales Salaries 83,000
    Sales Utilities Expense - 4,600
    Advertising Expense 46,800
    Office Utilities Expense 9,400
    Office Salaries 96,000
    To close the debit balances of the nominal
    accounts
    Questions:
    a) Based on the closing entries prepared, is the business a losing venture? Why?

    b. Based on the data given in compute for the gross profit ratio, operating ratio, -the rate
    of return on sales assuming that merchandise inventory based on a physical count at
    year end was P150,000. Is the business profitable? Comment on the ratios made
    Santos, Ellah Sharielle Q. ACC 302

    A) No, because subtracting the expense from the revenue will give the
    business a profit. Having a higher revenue than your expenses means you are
    not losing a venture.

    B) Gross Profit Ratio: 52.3%


    Operating Ratio: 57%
    Rate of Return on Sales: 55%

    The business is profitable. Having a 50-70% gross profit ratio tells that a
    business can be considered healthy. The computed gross profit is 52.3%. The
    operating ratio shows a 57% rate and the ideal OER is between 60% to 80%,
    but the smaller the ratio, the more efficient the company generates revenue.
    Lastly the rate of return of sale shows a 55%.

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