Week 4: Homework
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Suppose in its income statement for the year ended June 30, 2025, The Clorox Company reported the following
condensed data (dollars in millions).
Salaries and wages expenses
Depreciation expense
$ 550
110
Research and development expense
370
Loss on disposal of plant assets
55
Sales revenue
6,270
Interest expense
220
Cost of goods sold
Advertising expense
550
Rent expense
110
Sales returns and allowances
288
Utilities expense
55
3,135
Assume a tax rate of 34%.
(a)
Prepare a multiple-step income statement. ((RRoouunndd aannssw
weerrss ttoo 00 ddeecciim
maall ppllaacceess,, ee..gg.. 1155,,222222..))
The Clorox Company
Income Statement
(amounts in millions)
$
:
$
$
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(b)
Calculate the gross profit rate and the profit margin. ((RRoouunndd aannssw
weerrss ttoo 11 ddeecciim
maall ppllaaccee,, ee..gg.. 1155..22%
%..))
Gross profit rate
%
Profit margin
%
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(c1)
Assume the marketing department has presented a plan to increase advertising expenses by $330 million. It
expects this plan to result in an increase in both net sales and cost of goods sold of 20%. (Hint: Increase both sales
revenue and sales returns and allowances by 20%.) (Assume a tax rate of 34%, and round all amounts to whole
dollars.)
Prepare a multiple-step income statement. Report Net Sales without explicitly showing Sales Revenue and Sales
Returns and Allowances individually on the income statement. ((RRoouunndd aannssw
weerrss ttoo 00 ddeecciim
maall ppllaacceess,, ee..gg..
1155,,222222..))
The Clorox Company
Income Statement
(amounts in millions)
$
$
$
$
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$ 110
Income tax expense
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