E5-10 An alphabetical list of Rikard's adjusted accounts at its fiscal year end, August 31, 2014, follows All accounts have normal balances. Accounts payable $ 15,500 Notes payable $ 42,000 14,000 Accumulated depreciation-equipment 575 Prepaid insurance Accumulated depreciation-furniture 17,500 R. Smistad, capital 65,750 Cash 15,450 80,000 R. Smistad, drawings Cost of goods sold 271,500 Rent expense 24,000 Depreciation expense 7,000 Salaries expense 50,000 Equipment 35,000 2,250 Salaries payable Furniture 42,000 Sales 465,000 Insurance expense 3,575 Sales returns and allowances 16,300 Interest expense 2,100 Supplies 950 Interest payable 525 Supplies expense 6,325 Merchandise inventory 70,350 Unearned sales revenue 2,600 Additional information: 1. Of the notes payable, $6,000 becomes due on February 17, 2015. The balance is due in 2016. 2. On July 18, 2014, Rikard invested $3,500 cash in the business. Instructions (a) Prepare a multiple-step income statement, statement of owner's equity, and classified balance sheet. (b) Calculate the gross profit margin and profit margin. E5-11 Toys"R"Us, Inc. reported the following information (in US$ millions) for the three fiscal years ended: Jan. 28, 2012 Jan. 29, 2011 Jan. 30, 2010 Net sales $13,909 $13,864 $13,568 Cost of goods sold 8,939 8,939 8,790 Profit from operations 582 646 784 Profit 149 168 312 Instructions (a) Calculate the gross profit margin and profit margin for Toys"R" Us for each of the three years. (b) Recalculate profit margin using profit from operations as opposed to profit. (c) Comment on whether the ratios improved or weakened over the three years