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Prepare financial statements and calculate ratiosperpetual system. (LO 5,6) AP An alphabetical list of Rikards Company's adjusted accounts at its fiscal year end, August 31,

Prepare financial statements and calculate ratiosperpetual system.

(LO 5,6) AP

An alphabetical list of Rikards Company's adjusted accounts at its fiscal year end, August 31, 2017, follows. All accounts have normal balances.

Accounts payable $ 15,500 Notes payable $ 42,000
Accumulated depreciationequipment 14,000 Prepaid insurance 575
Accumulated depreciationfurniture 17,500 R. Smistad, capital 65,750
Cash 15,450 R. Smistad, drawings 80,000
Cost of goods sold 271,500 Rent expense 24,000
Depreciation expense 7,000 Salaries expense 50,000
Equipment 35,000 Salaries payable 2,250
Furniture 42,000 Sales 465,000
Insurance expense 3,575 Sales returns and allowances 16,300
Interest expense 2,100 Supplies 950
Interest payable 525 Supplies expense 6,325
Merchandise inventory 70,350 Unearned revenue 2,600

Additional information:

  • 1. Of the notes payable, $6,000 becomes due on February 17, 2018. The balance is due in 2019.
  • 2. On July 18, 2017, R. Smistad invested $3,500 cash in the business.

Instructions

(a)

Prepare a multiple-step income statement, statement of owner's equity, and classified balance sheet.

(b)

Calculate the gross profit margin and profit margin.

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