Merchandising Income statement: periodic Inventory system

p4. Selected accounts from Dence’s Gourmet Shop’s adjusted trial balance as of March 31, 2014, the end of the current fiscal year, follow. The merchandise inventory for Dence’s was $81,222 at the beginning of the year and $76,664 at the end of the year.

Dence’s Gourmet shop partial Adjusted trial Balance March 31, 2014

 

 

Sales	Â	433,912
Sales Returns and Allowances	11,250	Â
Purchases	221,185	Â
Purchases Returns and Allowances	Â	30,238
Freight-In	10,078	Â
Store Salaries Expense	107,550	Â
Office Salaries Expense	26,500	Â
Advertising Expense	18,200	Â
Rent Expense	14,400	Â
Insurance Expense	2,800	Â
Utilities Expense	18,760	Â
Store Supplies Expense	464	Â
Office Supplies Expense	814	Â
Depreciation Expense—Store Equipment	1,800	Â
Depreciation Expense—Office Equipment	1,850	Â

 

 

 

 

 

 

 

Chapter Assignments                                                                                                                                           243

 

reQUIreD

1.    Prepare a multistep income statement for Dence’s. Store Salaries Expense, Advertis- ing 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 oper- ating expenses.

2.    Business AppliCAtion ▶ Based on your knowledge at this point in the course, how would you use Dence’s income statement to evaluate the company’s profitabil- ity? What other financial statements should you consider, and why?