I need help working this problem. Please help!

Question

Service Revenue  Cost of Goods Sold  Gross Profit  Operating Expenses  Net Income

$72,820                 A.                           $31,130         B.                            $11,670

$109,900            $73,210                    C.                   D.                            $29,770

E.                        $73,120                   $112,800     $48,500                       F.

 

I am supposed to figure out what A,B,C,D,E,F are and I'm not sure how to come up with the other balances. 

Answer 1

This problem involves understanding an Income and Expense Statement (used to be called Profit and Loss). In this case, we have numbers from a simplified Income and Expense Statement.

 

Service Revenue minus Cost of Goods = Gross Profit;  Gross Profit minus Operating Expenses = Net Profit

To solve for A, we look at SR - COG = GP; $72,120 - x = $31,130; x = 72,120 - 31,130 = $41,690

 

To solve for B, we look at GP - OE = NP; $41,690 - x = 11,670; x = 41,690 - 11,670 = $30,020

 

To solve for C, we look at SR - COG = GP; $109,900 - 73,210 = $36,690

Since we now have C, we can solve for D, which is GP - OE = NP; $36,690 - x = 29,770; x = $6,920

 

To solve for E, we look at SR - COG = GP; x - 73,120 = 112,800; x = 112,800 + 73,120 = $185,920

 

To solve for F, we look at GP - OE = NP; $112,800 - 48,500 = $64,300