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The trial balance of Poorten Wholesale Centre contained the following accounts at November 30, the company's fiscal year end:

The trial balance of Poorten Wholesale Centre contained the following accounts at November 30, the company's fiscal year end:

POORTEN WHOLESALE CENTRE
Trial Balance
November 30, 2008

Debit Credit
Cash $ 12,700
Accounts receivable 15,700
Merchandise inventory 45,200
Supplies 1,900
Notes receivable 25,000
Land 60,000
Building 85,000
Accumulated amortization-building $ 17,600
Delivery equipment 48,000
Accumulated amortization-delivery equipment 24,000
Accounts payable 48,500
Unearned sales revenue 3,000
Mortgage payable 51,000
K. Poorten, capital 132,000
K. Poorten, drawings 12,000
Sales 751,300
Interest revenue 2,020
Sales returns and allowances 4,200
Sales discounts 3,750
Cost of goods sold 498,100
Advertising expense 26,400
Amortization expense 10,125
Freight out 16,700
Insurance expense 3,420
Interest expense 3,700
Salaries expense 137,025
Supplies expense 6,500
Utilities expense 14,000

$1,029,420 $1,029,420


Other data:

1. All adjustments have been recorded and posted except for the inventory adjustment. Merchandise inventory actually on hand at November 30, 2008, is $42,600.
2. Last year, Poorten Wholesale had a gross profit margin of 35% and a profit margin of 5%.

Instructions



Prepare the adjusting entry.

Date Account Titles and Explanations Debit Credit
Nov. 30




Prepare a multiple-step income statement. Report the following selected amounts from your completed income statement:

Net sales $
Gross profit
Total operating expenses
Net income $



Prepare a single-step income statement. Report the following selected amounts from your completed income statement:

Total revenues $
Total operating expenses
Net income $




Compare the two income statements and comment on the usefulness of each one.



Calculate the gross profit margin and profit margin for 2008. Round to one decimal place.

2008
Gross profit margin %
Profit margin %



Prepare the closing entries. Post to the Income Summary account. Check that the balance in Income Summary before closing it is equal to net income.

Nov. 30

Nov. 30
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This question was asked on Mar 25, 2010.

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