Selected accounts from the adjusted trial balance for Pierre’s Gourmet Shop, Inc., as of March 31, 20x7, the end of the fiscal year, are shown below.

The merchandise inventory for Pierre’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 Pierre’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. User Insight: Based on your knowledge at this point in the course, how would you use the income statement for Pierre’s Gourmet Shop to evaluate the company’s profitability? What other financial statements should you consider and why?
Merchandising Transactions: Periodic Inventory System

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Pierre's Gourmet Shop, Inc. Partial Adjusted Trial Balance March 31, 20x7 Sales $165,000 Sales Returns and Allowances $ 2,000 Purchases Purchases Returns and Allowances Freight-In Store Salaries Expense Office Salaries Expense Advertising Expense Rent Expense Insurance Expense 70,200 2,600 2,300 32,625 12,875 24,300 2,400 1,200 Utilities Expense 1,560 Store Supplies Expense 2,880 Office Supplies Expense 1,175 Depreciation Expense-Store Equipment 1,050 Depreciation Expense-Office Equipment Income Taxes 800 1,000