Hendrys Boutique is a retail clothing store for women. The store operates out of a rented building

Hendry’s Boutique is a retail clothing store for women. The store operates out of a rented building in Storm Lake, Iowa. Shown below is the store’s adjusted year-end trial balance dated December 31, 2011.

Instructions
a. Prepare an income statement for Hendry’s Boutique dated December 31, 2011.
b. Compute the store’s gross profit margin as a percentage of net sales.
c. Do the store’s customers seem to be satisfied with their purchases? Defend your answer.
d. Explain how you can tell that the business records inventory purchases net of any purchase discounts.
e. The store reports sales taxes payable of $3,200 in its adjusted trial balance. Explain why it does not report any sales taxes expense.
f. Which accounts appearing in the store’s adjusted trial balance comprise its operatingcycle?

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HENDRY'S BOUTIQUE ADJUSTED TRIAL BALANCE DECEMBER 31, 2011 Cash Accounts receivable Merchandise inventory Prepaid rent Office supplies . Office equipment . . Accumulated depreciation: office equipment Accounts payable .. Sales taxes payable Capital stock Retained earnings Sales. Sales returns and allowances Cost of goods sold- Purchase discounts lost. Utilities expense Office supply expense Depreciation expense: office equipment. Rent expense... Insurance expense Salaries expense- . Income taxes expense S 15,200 2,600 17,500 1,800 900 41,000 $12,000 12,750 3,200 18,000 21,050 226,000 2,500 100,575 250 4,120 520 2,750 6,100 900 88,095 8,190 .. $293,000 $293,000