The ledgers of Lee's Leathers Inc. contain the following balances as of January 31, 1997 (its year end): \(\square\)

Income taxes are calculated at 30 percent of income; Lee's had 84,000 shares of common stock outstanding for the entire year. Total assets amounted to \(\$ 5,460,000\) and common stockholders equity was \(\$ 1,966,200\) at year end.
\section*{Instructions}

(a) Prepare in good form a multiple-step income statement for Lee's Leathers Inc.

(b) Calculate three measures of profitability and one ratio of solvency.

(c) Assume that you are considering supplying Lee's Leathers with a line of wallets, key holders, and other small leather goods for sale in its two stores. Is this a company for which you would like to be a supplier? What additional information would you like to have before deciding to become a supplier for Lee's Leathers?

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Advertising expense Depreciation expense Gain on the sale of equipment Insurance expense Interest expense $ 126,000 53,000 8,500 54,000 13,900 Interest revenue 7,300 Inventory, February 1 296,400 Inventory, January 31 303,400 Managerial salaries 129,800 Miscellaneous administrative expenses 22,200 Miscellaneous selling expenses 39,000 Net Purchases 1,697,000 Net Sales Rent expense Sales staff wages Transportation in 2,647,000 84,000 159,000 27,900