Exercises 3: Among membership warehouse stores, Costco Wholesale Corporation is Sams Clubs major competitor. Costcos income statement for the year ended September 3, 2006, included the following revenues and expenses (presented in alphabetical order, in millions of dollars):

Cost of merchandise sold $ 52,745

Other income and expense, net +125

Net sales 60,151

Income tax expense 648

Selling, general, and administrative expenses 5,78

Required:

1. Prepare Costcos income statement for the year ended September 3, 2006, using the multistep format presented in this chapter.

2. Compute Costcos gross profit percentage for the year. What does it tell you about the company?