Problem -
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 return 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.