(Answered) Preparing a multi step income statement with sales

Accounting

Preparing a Multi step Income Statement with Sales Discounts and Sales Returns and Allowances and Computing the Gross Profit Percentage Big Tommy Corporation is a local grocery store organized seven years ago as a corporation. The bookkeeper prepared the following statement (assume that all amounts are correct, but note the incorrect terminology and format):

Required:

1. Prepare a properly formatted multi step income statement that would be used for internal reporting purposes. Treat Sales Returns and Allowances and Sales Discounts as contra-revenue accounts.

2. Prepare a properly formatted multi step income statement that would be used for external reporting purposes, beginning with the amount for Net Sales.

3. Compute and interpret the gross profit percentage (using the formula shown in this chapter and rounding to one decimal place).

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