Distributing Company P5-5A. Profitability Analysis Kolby Enterprises reports the following information on its income statement: L04 Net sales. ... Cost of goods sold Selling expenses $250,000 Administrative expenses. 150,000 Other income. 50,000 Other expense $10,000 15,000 10,000 Required Calculate Kolby's gross profit percentage and return on sales ratio. Explain what each ratio tells us about Kolby's performance. Kolby is planning to add a new product and expects net sales to be $45,000 and cost of goods to be $38,000. No other income or expenses are expected to change. How will this affect Kolby's gross profit percentage and return on sales ratio? What do you advise regarding the new product offering? p5-64. Journal Entries for Merchandise Transactions on Seller's and Buyer's BooksPeriodic System L05 The following transactions occurred between Southwick Company and Mann Stores, Inc., during (Appendix 5 March: Mar. 8 Southwick sold $7,100 worth of merchandise to Mann Stores, terms 2/10, n/30. 10 Mann Stores paid freight charges on the shipment from Southwick Company, $200. 12 Mann Stores returned $700 of the merchandise shipped on March 8. 17 Southwick received full payment for the net amount due from the March 8 sale. 20 Mann Stores returned goods that had been billed originally at $400. Southwick issued a check for $392. Required Prepare the necessary journal entries for (a) the books of Southwick Company and (b) the books of Mann Stores, Inc. Assume that both companies use the periodic inventory system. ME M