Prepare financial statements and calculate ratios-perpetual system.
An alphabetical list of Rikards Company's adjusted accounts at its fiscal year end, August 31, 2017, follows. All accounts have normal balances.
| Accounts payable |
$ 15,500 |
Notes payable |
$ 42,000 |
| Accumulated depreciation-equipment |
14,000 |
Prepaid insurance |
575 |
| Accumulated depreciation-furniture |
17,500 |
R. Smistad, capital |
65,750 |
| Cash |
15,450 |
R. Smistad, drawings |
80,000 |
| Cost of goods sold |
271,500 |
Rent expense |
24,000 |
| Depreciation expense |
7,000 |
Salaries expense |
50,000 |
| Equipment |
35,000 |
Salaries payable |
2,250 |
| Furniture |
42,000 |
Sales |
465,000 |
| Insurance expense |
3,575 |
Sales returns and allowances |
16,300 |
| Interest expense |
2,100 |
Supplies |
950 |
| Interest payable |
525 |
Supplies expense |
6,325 |
| Merchandise inventory |
70,350 |
Unearned revenue |
2,600 |
Additional information:
- 1. Of the notes payable, $6,000 becomes due on February 17, 2018. The balance is due in 2019.
- 2. On July 18, 2017, R. Smistad invested $3,500 cash in the business.
Instructions
(a) Prepare a multiple-step income statement, statement of owner's equity, and classified balance sheet.
(b) Calculate the gross profit margin and profit margin.