Hendrys Boutique is a retail clothing store for women. The store operates out of a rented building in Storm Lake, Iowa. The following is the stores adjusted year-end trial balance dated December 31, current year.

HENDRY'S BOUTIQUE
Adjusted Trial Balance
December 31, current year
Cash	$	20,340
Accounts receivable		3,680
Merchandise inventory		28,000
Prepaid rent		2,860
Office supplies		1,920
Office equipment		53,400
Accumulated depreciation: office equipment					$	15,800
Accounts payable						16,700
Sales taxes payable						4,120
Capital stock						24,400
Retained earnings						29,255
Sales						302,000
Sales returns and allowances		3,300
Cost of goods sold		134,415
Purchase discounts lost		1,000
Utilities expense		6,652
Office supply expense		1,072
Depreciation expense: office equipment		4,700
Rent expense		8,160
Insurance expense		1,410
Salaries expense		109,830
Income taxes expense		11,536
	$	392,275			$	392,275

Required:

a. Prepare an income statement for Hendrys Boutique dated December 31, current year.

b. Compute the stores gross profit margin as a percentage of net sales.

c. Do the stores customers seem to be satisfied with their purchases?

• Yes

• No

f. Which accounts appearing in the stores adjusted trial balance comprise its operating cycle? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

check all that apply

• Cash
• Accounts receivable
• Merchandise inventory
• Prepaid rent
• Office supplies