Refer to the Following Information to Answer the Question(s)regarding Anita

question 24

Multiple Choice

Refer to the following information to answer the question(s) regarding Anita Lupino's toy and game shop:
Anita Lupino is planning to open her own toy and game shop. She has conducted a great deal of research at the local library, contacted the industry trade association, and has set up a meeting with a consultant at the SBDC next week. Before she goes to the SBDC, she wants to sketch out an estimated income statement. She reviews the following data from RMA's Annual Statement Studies:
Cost of Goods Sold 57.3 percent of net sales
Operating Expenses 32.9 percent of net sales
Gross Profit 42.7 percent of net sales
-If Anita's research suggests that she can expect net sales of $475,000, what net profit could she expect?

• A)$202,825
• B)$46,550
• C)$69,350
• D)$156,275

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses and taxes from total revenue.

Annual Amortization

The process of gradually writing off the initial cost of an intangible asset over its useful life on a yearly basis.

Investment Balance

The total value of all investments held by an individual or entity at a given time, including stocks, bonds, and other securities.

Equity Method

An accounting technique used to record investments in other companies when the investing company has significant influence but does not control the investee.