Western Lighting Warehouse has a July 31 fiscal year end and uses a perpetual inventory system. An alphabetical list of its account balances at July 31, 2014, follows. All accounts have normal balances.

1. All adjustments have been recorded and posted except for the inventory adjustment. According to the inventory count, the company has $40,000 of merchandise on hand.
2. Last year Western Lighting Warehouse had a gross profit margin of 40% and a profit margin of 10%.
Instructions
(a) Prepare any additional required adjusting entries.
(b) Prepare a single-step income statement.
(c) Prepare a multiple-step income statement.
(d) Calculate gross profit margin and profit margin. Compare with last year's margins and comment on the results.
(e) Prepare the closing entries. Post to the Income Summary account. Check that the balance in the Income Summary account before closing it is equal to profit.
TAKING IT FURTHER Compare the two income statements and comment on the usefulness of each one.

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A. Jamal, capital A. Jamal, drawings Accounts payable Accounts receivable Accumulated depreciation-equipment $ 2,300 3,000 41,250 46,000 $166,500 39,600 7,600 38,900 33,400 30,875 247,500 8,350 83,500 6,055 3,195 575 Interest expense Interest revenue Merchandise inventory Note payable Notes receivable Rent expense Cost of goods sold Depreciation expense Equipment Freight out Insurance expense Interest payable Sales Sales discounts Sales returns and allowances Unearned revenue Utilities expense 62,000 45,000 450,000 4,500 11,250 4,800 12,600