The income statements for Infonext Corporation for 2007 and 2008 are provided below:
-Refer to the information above. Assume that Infonext's gross profit margin in 2009 will be the same as the 2008 industry average of 40% and that sales will grow at the same rate as last year.
Project the 2009 sales and cost of goods sold for Infonext Corporation.

Question

The income statements for Infonext Corporation for 2007 and 2008 are provided below:  
-Refer to the information above. Assume that Infonext's gross profit margin in 2009 will be the same as the 2008 industry average of 40% and that sales will grow at the same rate as last year.
Project the 2009 sales and cost of goods sold for Infonext Corporation.

Quizplus · Accepted Answer

To project the 2009 sales, we need to use the growth rate of 20% from 2007 to 2008, which gives us an estimated sales figure of $24,200 for 2009. To calculate the cost of goods sold, we need to use the gross profit margin of 40% from 2008, which gives us a cost of goods sold figure of $14,520. Therefore, the correct choice is D. To project the 2009 sales and cost of goods sold for Infonext Corporation, we need to use the given information and the assumption that the gross profit margin in 2009 will be the same as the 2008 industry average of 40%.

We can start by calculating the cost of goods sold for 2008:

Cost of goods sold = Sales × (100% - Gross profit margin)
Cost of goods sold = $22,880 × (100% - 36%)
Cost of goods sold = $14,643.20

Next, we can use the growth rate from 2007 to 2008 (33.33%) to project the 2009 sales:

Projected sales for 2009 = 2008 sales × (1 + growth rate)
Projected sales for 2009 = $22,880 × (1 + 33.33%)
Projected sales for 2009 = $30,506.67

Finally, we can use the projected sales and the gross profit margin assumption to calculate the projected cost of goods sold for 2009:

Projected cost of goods sold for 2009 = Projected sales × (100% - Gross profit margin)
Projected cost of goods sold for 2009 = $30,506.67 × (100% - 40%)
Projected cost of goods sold for 2009 = $18,304

Therefore, the projected 2009 sales for Infonext Corporation is $30,506.67 and the projected cost of goods sold for 2009 is $18,304. The closest answer choice is D: Sales = $24,200; Cost of goods sold = $14,520.

The Income Statements for Infonext Corporation for 2007 and 2008