Selected accounts from the adjusted trial balance for Louise’s Gourmet Shop, Inc., as of March 31, 2010, the end of the fiscal year, are shown below. 

The merchandise inventory for Louise’s Gourmet Shop was $38,200 at the beginning of the year and $29,400 at the end of the year. 

1. Using the information given, prepare an income statement for Louise’s Gourmet Shop, Inc. 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 Louise’s Gourmet Shop to evaluate the company’s profitability? What other financial statements should you consider and why?

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Louise's Gourmet Shop, Inc. Partial Adjusted Trial Balance March 31, 2010 Sales $168,700 $ 5,700 Sales Returns and Allowances Purchases 70,200 Purchases Returns and Allowances 2,600 Freight-In Store Salaries Expense 2,300 33,125 Office Salaries Expense Advertising Expense 12,875 23,800 Rent Expense 2,400 Insurance Expense Utilities Expense Store Supplies Expense Office Supplies Expense 1,300 1,560 2,880 1,075 Depreciation Expense-Store Equipment 1,050 Depreciation Expense-Office Equipment 800 1,000 Income Taxes