Rodriguez Inc. operates a retail operation that purchases and sells home entertainment products. The company purchases all merchandise inventory on credit and uses a periodic inventory system. The Accounts Payable account is used for recording inventory purchases only; all other current liabilities are accrued in separate accounts. You are provided with the following selected information for the fiscal years 2009 through 2012, inclusive.
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2009
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2010
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2011
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2012
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Income Statement Data
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Sales revenue
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$55,000
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$ (e)
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$47,000
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Cost of goods sold
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(a)
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13,800
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14,300
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Gross profit
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38,300
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35,200
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(i)
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Operating expenses
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34,900
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(f)
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28,600
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Net income
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$ (b)
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$ 2,500
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$ (j)
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Balance Sheet Data
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Inventory
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$7,200
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$ (c)
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$ 8,100
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$ (k)
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Accounts payable
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3,200
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3,600
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2,500
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(l)
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Additional Information
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Purchases of merchandise
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inventory on account
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$14,200
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$ (g)
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$13,200
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Cash payments to suppliers
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(d)
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(h)
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13,600
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Instructions
(a) Calculate the missing amounts.
(b) Sales declined over the 3-year fiscal period, 2010-2012. Does that mean that profitability necessarily also declined? Explain, computing the gross profit rate and the profit margin ratio for each fiscal year to help support your answer.