Question: 1. Use the following information to compute profit margin for each separate company a through e.
Net Income Net Sales Net Income Net Sales
a. $ 5,390 $ 44,830 d. $55,234 $1,458,999
b. 87,644 398,954 e. 70,158 435,925
c. 93,385 257,082
Which of the five companies is the most profitable according to the profit margin ratio? Interpret that company's profit margin ratio.
2. If your company pays a $4,800 premium on April 1, 2011, for two years' insurance coverage, how much insurance expense is reported in 2012 using cash basis accounting?