Farm Safe, Inc. sells agribusiness related clothing that is fashionable, yet meets safety guidelines for agribusiness use. The store is based in Morgantown, WV, and has a fan base of young women in agriculture, that want to look trendy but also be safe while they work. Below is the store's adjusted year-end trial balance dated December 31, 2018 FARM SAFE, INC ADJUSTED TRIAL BALANCE DECEMBER 31, 2018 Cash $ 47,124 Accounts receivable 5,280 Merchandise inventory 35,640 Prepaid rent 3,720 Office supplies 1,800 Office equipment 84,000 |Accumulated depreciation: office equipment $ 24,000 Accounts payable 26,400 Sales taxes payable 6,000 Capital stock 37,200 Retained earnings 43,200 Sales 460,800 Sales returns and allowances 4,800 Cost of goods sold 189,156 Purchase discounts lost 480 Utilities expense 8,400 Office supply expense 1,080 Depreciation expense: office equipment 5,640 Rent expense 12,000 Insurance expense 1,800 Salaries expense 180,000 180,000 Salaries expense Income tax expense 16,680 Instructions Using the information above, prepare an income statement for Farm Safe, Inc. dated a December 31, 2018. b. Using the information in (a) above, compute Farm Safe's gross profit margin as a percentage of net sales. Based on this information above, do you think the store's customers seem to be satisfied C. with their purchases? Please explain your answer. d. Does Farm Safe, Inc. record its inventory purchases net of any purchase discounts? How can you tell; explain your answer. e. Based on the information previously, Farm Safe reports sales taxes payable of $6,000 in its adjusted trial balance, but there does not seem to be any sales tax expenses recorded. Is this an error; should the business report any sales taxes expense? Explain your answer. f. Based on the information here, and what we have learned in class, explain what 'operating cycle' means. Which of the accounts above are part of Farm Safe's operating cycle? Farm Safe, Inc. sells agribusiness related clothing that is fashionable, yet meets safety guidelines for agribusiness use. The store is based in Morgantown, WV, and has a fan base of young women in agriculture, that want to look trendy but also be safe while they work. Below is the store's adjusted year-end trial balance dated December 31, 2018 FARM SAFE, INC ADJUSTED TRIAL BALANCE DECEMBER 31, 2018 Cash $ 47,124 Accounts receivable 5,280 Merchandise inventory 35,640 Prepaid rent 3,720 Office supplies 1,800 Office equipment 84,000 |Accumulated depreciation: office equipment $ 24,000 Accounts payable 26,400 Sales taxes payable 6,000 Capital stock 37,200 Retained earnings 43,200 Sales 460,800 Sales returns and allowances 4,800 Cost of goods sold 189,156 Purchase discounts lost 480 Utilities expense 8,400 Office supply expense 1,080 Depreciation expense: office equipment 5,640 Rent expense 12,000 Insurance expense 1,800 Salaries expense 180,000 180,000 Salaries expense Income tax expense 16,680 Instructions Using the information above, prepare an income statement for Farm Safe, Inc. dated a December 31, 2018. b. Using the information in (a) above, compute Farm Safe's gross profit margin as a percentage of net sales. Based on this information above, do you think the store's customers seem to be satisfied C. with their purchases? Please explain your answer. d. Does Farm Safe, Inc. record its inventory purchases net of any purchase discounts? How can you tell; explain your answer. e. Based on the information previously, Farm Safe reports sales taxes payable of $6,000 in its adjusted trial balance, but there does not seem to be any sales tax expenses recorded. Is this an error; should the business report any sales taxes expense? Explain your answer. f. Based on the information here, and what we have learned in class, explain what 'operating cycle' means. Which of the accounts above are part of Farm Safe's operating cycle
