The trial balance and adjustments columns of the work sheet of Purcell Music Company include the following accounts and balances at November 30, 20X4: Trial Balance Adjustments Account Title Debit Credit Debit Credit Cash 24,000 Accounts receivable 14.500 Inventory 36,330 Supplies. 2,800 Furniture. 39,600 Accumulated depreciation 4.900 Accounts payable 12.600

(a) 4.000

(b) 1,010

(c) 2,400

(d) 2.450

(f) 1.000 Salary payable... Unearned sales revenue. 13.570

(e) 6.700 Note payable, long-term 15.000 H. Purcell, capital. 60.310 H. Purcell, drawing.. 42.000 Sales revenue 174,000

(a) 4.000

(e) 6.700 Sales returns. 6.300 Cost of goods sold. 72.170

(b) 1,010 Selling expense 28.080

(f) 1.000 General expense. 13.100

(c) 2.400

(d) 2.450 Interest expense Total.. 1.500 280.380 280.380 17.560 17.560 Required 1. Inventory on hand one year ago, at November 30, 20X3, was $32.650. Without entering the preceding data on a formal work sheet, prepare the company's multi-step income statement for the year ended November 30, 20X4. 2. Compute the gross profit percentage and the rate of inventory turnover for 20X4. For 20X3. Purcell's gross profit percentage was 55%, and inventory turnover was 1.91 times during the year. Does the two-year trend in these ratios suggest improvement or deterio- ration in profitability?