Part A. The following information is available for Entity Y:

Sales revenue $453,000

Sales returns and allowances 10,000

Sales discounts 8,800

Cost of goods sold 260,000

Operating expenses 71,400

Interest expense 1,500

Gain on sale equipment 2,500

Interest revenue 1,050

Instructions

1. Use the above information to prepare a multiple-step income statement for the year ended December 31, 2023. The income tax rate is 22%. Check figures: Income from operations is $102,800. Net income is $81,783.

2. Compute the profit margin and the gross profit rate. Show and label calculations.

3. Suggest at least three ways these measures might be materially improved and net income increased. Be sure to consider the relationship between net sales, cost-of-goods-sold and gross profit.

Part B: Entity B sold Entity C $30,000 of merchandise, terms 2/10, net 30. Entity B paid $10,000 for the merchandise. Entity B uses a perpetual inventory system.

Instructions

1. Journalize the sale on Entity B's books.

2. If Entity C returned $3,000 of the merchandise purchased, and paid for the remainder in 10 days from the date of the sales invoice, how much did Entity C remit to Entity B? You must show any calculations.