Reference no: EM13884752

Merchandising Income statement: periodic Inventory system

Selected accounts from Will's Sports Equipment's adjusted trial balance on September 30, 2014, the fiscal year end, follow. The company's beginning merchan- dise inventory was $38,200 and ending merchandise inventory is $29,400 for the period.

Will's sports equipment partial Adjusted trial Balance september 30, 2014

Sales		165,000
Sales Returns and Allowances	2,000
Purchases	70,200
Purchases Returns and Allowances		2,600
Freight-In	2,300
Store Salaries Expense	32,625
Office Salaries Expense	12,875
Advertising Expense	24,300
Rent Expense	2,400
Insurance Expense	1,200
Utilities Expense	1,560
Store Supplies Expense	2,880
Office Supplies Expense	1,175
Depreciation Expense-Store Equipment	1,050
Depreciation Expense-Office Equipment	800

Required

1. Prepare a multistep income statement for Will's. Store Salaries Expense, Advertising 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 operating expenses.

2. Business Application- Based on your knowledge at this point in the course, how would you use Will's income statement to evaluate the company's profitability? What other financial statements should you consider and why?