Selected accounts from the adjusted trial balance of Daniel's Sports Equipment on September 30, 2010, the fiscal year end. The company's beginning merchandise inventory was $81,222 and ending merchandise inventory is $76,664 for the period.

Required

1. Prepare a multistep income statement for Daniel's Sports Equipment. 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. Based on your knowledge at this point in the course, how would you use the income statement for Daniel's Sports Equipment to evaluate the company's profitability? What other financial statements should you consider andwhy?

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Daniel's Sports Equipment Partial Adjusted Trlal Balance September 30, 2010 Sales Sales Returns and Allowances Purchases Purchases Returns and Allowances Freight-In Store Salaries Expense Office Salaries Expense Advertising Expense Rent Expense Insurance Expense Utilities Expense Store Supplies Expense Office Supplies Expense Depreciation Expense-Store Equipment Depreciation Expense-Office Equipment $440,912 $ 18,250 221,185 30,238 10,078 105,550 26,500 20,200 15,000 2,200 18,760 464 814 1,800 ,850