multi income statement 461296
Parkland Department Store is located near the Lyndale Shopping Mall. At the
end of the company’s fiscal year on December 31, 2012, the following accounts appeared in its adjusted trial balance.
Accounts Payable $ 73,300
Accounts Receivable 45,500
Accumulated Depreciation”Buildings 52,500
Accumulated Depreciation”Equipment 42,600
Common Stock 140,000
Cost of Goods Sold 412,000
Depreciation Expense 23,400
Gain on Disposal of Plant Assets 4,300
Income Tax Expense 15,000
Insurance Expense 8,400
Interest Expense 7,000
Interest Payable 2,000
Mortgage Payable 62,500
Prepaid Insurance 2,400
Maintenance and Repairs Expense $ 6,200
Retained Earnings 19,200
Salaries and Wages Expense 111,000
Sales Revenue 626,000
Salaries and Wages Payable 3,500
Sales Returns and Allowances 8,000
Utilities Expense 11,000
Additional data: $20,000 of the mortgage payable is due for payment next year.
(a) Prepare a multiple-step income statement, a retained earnings statement, and a classified balance sheet.
[ (a) Net income $28,300, Tot. assets $313,800 ]
(b) Calculate the profit margin ratio and the gross profit rate.
(c) The vice president of marketing and the director of human resources have developed a proposal whereby the company would compensate the sales force on a strictly commission basis. Given the increased incentive, they expect net sales to increase by 25%. As a result, they estimate that gross profit will increase by $50,500 and expenses by $27,800. Compute the expected new net income. (Hint: You do not need to prepare an income statement.) Then, compute the revised profit margin ratio and gross profit rate. Comment on the effect that this plan would have on net income
and the ratios, and evaluate the merit of this proposal.
Really need help with Multi income statement part!