Calculate the gross profit margin and profit margin

Assignment Help Accounting Basics

Reference no: EM131370378

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.

Reference no: EM131370378

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