Perry Corporation is a local grocery store organized seven years ago as a corporation. At that time, 10,000 common shares were issued to the three organizers. The store is in an excellent location, and sales have increased each year. At the end of 2018, the bookkeeper prepared the following statement (assume that all amounts are connect; note the incorrect terminology and format):

Required

1. Beginning with net sales, prepare a multiple-step statement of earnings (showing both gross profit and earnings from operations). Treat sales discounts as a contra-revenue account2. The beginning and ending balances of accounts receivable were $16,000 and $18,000, respectively.Compute the gross profit percentage and receivables turnover ratio and explain their meaning.

Transcribed Image Text:

PERRY CORPORATION Profit and Loss December 31, 2018 Debit Credit $184,000 Sales Cost of sales Sales returns and allowances Selling expenses Administrative and general expenses Bad debt expense Sales discounts $ 98,000 9,000 17,000 18,000 2,000 8,000 Income tax expense 10,900 Net earnings 21,100 Totals $184,000 $184,000