PA6-4 Preparing a Multistep Income Statement with Sales Discounts and Sales Returns and Allowances and Computing the Gross Profit Percentage [LO 6-5]

[The following information applies to the questions displayed below.]

Big Tommy Corporation is a local grocery store organized seven years ago as a corporation. The book-keeper prepared the following statement (assume that all amounts are correct, but note the incorrect terminology and format):

BIG TOMMY CORPORATION Profit and Loss December 31
	Debit		Credit
Sales			$	275,000
Cost of Goods Sold	$	207,000
Sales Returns and Allowances		3,700
Sales Discounts		4,200
Salaries and Wages Expense		40,000
Office Expense		2,500
Travel Expenses		1,000
Income Tax Expense		4,980
Net Profit		11,620
Totals	$	275,000	$	275,000

11.

value: 7.69 points

Required information

PA6-4 Part 1

Required:
1.	Prepare a properly formatted multistep income statement that would be used for internal reporting purposes. Treat Sales Returns and Allowances and Sales Discounts as contra-revenue accounts.

12.

value: 7.69 points

Required information

PA6-4 Part 2

2.	Prepare a properly formatted multistep income statement that would be used for external reporting purposes, beginning with the amount for Net Sales.

13.

value: 7.69 points

Required information

PA6-4 Part 3

3.	Compute the gross profit percentage. (Round your answer to 1 decimal place.)