The trial balance and adjustments columns of the work sheet of Schweiz Coffee Company include the following accounts and balances at September 30, 19X5:

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1. Inventory on hand at September \(30,19 \mathrm{X} 4\), was \(\$ 32,580\). Without entering the preceding data on a formal accounting work sheet, prepare the company's multiple-step income statement for the year ended September 30, 19X5, and its September 30, 19X5, balance sheet. Show your computation of the ending balance of Retained Earnings.
2. Compute the gross margin percentage and the inventory turnover for \(19 \mathrm{X} 5\). For \(19 \mathrm{X} 4\), Schweiz's gross margin percentage was 57 percent, and the rate of inventory turnover was 4.2 . Does the two-year trend in these ratios suggest improvement or deterioration in profitability?

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Trial Balance Adjustments Account Title Debit Credit Debit Credit Cash 7,300 Accounts receivable.. 4,360 (a) 1,800 Inventory. 29,630 (b) 2,100 Supplies....... 10,700 (c) 7,640 Equipment.. 79,450 Accumulated depreciation...... 29,800 (d) 9,900 Accounts payable.. 13,800 Salary payable.. (f) 200 Unearned sales revenue... 3,780 (e) 2,600 Note payable, long-term. 10,000 Common stock. 25,000 Retained earnings. Dividends...... 33,360 35,000 Sales revenue 242,000 1,800 (e) 2,600 Sales returns 3,100 Cost of goods sold. 125,600 (b) 2,100 Selling expense 40,600 (c) 7,640 (f) 200 General expense 21,000 (d) 9,900 Interest expense. 1,000 Total........... 357,740 357,740 24,240 24,240