Merchandising Income statement: periodic Inventory system
Selected accounts from Will's Sports Equipment's adjusted trial balance on September 30, 2014, the fiscal year end, follow. The company's beginning merchan- dise inventory was $38,200 and ending merchandise inventory is $29,400 for the period.
Will's sports equipment partial Adjusted trial Balance september 30, 2014
|
Sales
|
|
165,000
|
|
Sales Returns and Allowances
|
2,000
|
|
|
Purchases
|
70,200
|
|
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Purchases Returns and Allowances
|
|
2,600
|
|
Freight-In
|
2,300
|
|
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Store Salaries Expense
|
32,625
|
|
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Office Salaries Expense
|
12,875
|
|
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Advertising Expense
|
24,300
|
|
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Rent Expense
|
2,400
|
|
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Insurance Expense
|
1,200
|
|
|
Utilities Expense
|
1,560
|
|
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Store Supplies Expense
|
2,880
|
|
|
Office Supplies Expense
|
1,175
|
|
|
Depreciation Expense-Store Equipment
|
1,050
|
|
|
Depreciation Expense-Office Equipment
|
800
|
|
Required
1. Prepare a multistep income statement for Will's. Store Salaries Expense, Advertising Expense, Store Supplies Expense, and Depreciation Expense-Store Equipment are selling expenses. The other expenses are general and administrative expenses. The company uses the periodic inventory system. Show details of net sales and operating expenses.
2. Business Application- Based on your knowledge at this point in the course, how would you use Will's income statement to evaluate the company's profitability? What other financial statements should you consider and why?