Kim is an accountant for Jacqueline Daniels Kitchenry (JDK), a company owned by a celebrity chef. JDK has two main components: a service business, which provides high-end catering in the Manhattan area, and a merchandising business that sells cookware and cooking supplies nationwide. In her role, Kim must prepare separate statements for these two components of JDK.

Edward has recently been hired as Kim's intern. She is teaching him about the company's accounts and how they are handled. Kim and Edward are getting ready to prepare the income statements for JDK for the third quarter of the year. Because this business has two components, there will be two income statements.

1. Kim and Edward start with the adjusted trial balance for the business's merchandising component. In addition to the costs shown here, its cost of goods sold totaled $275,000.