Preparing a Multi step Income Statement with Sales Discounts and Sales Returns and Allowances and Computing the Gross Profit Percentage Psymon Company, Inc., sells construction equipment. The annual fiscal period ends on December 31. The following adjusted trial balance was created from the general ledger accounts on December 31:
Required:
1. Prepare a Multi step income statement that would be used for internal reporting purposes. Treat Sales Discounts and Sales Returns and Allowances as contra-revenue accounts, and report all expenses separately.
2. Prepare a Multi step income statement that would be used for external reporting purposes, beginning with the amount for Net Sales.
3. Compute and interpret the gross profit percentage (using the formula shown in this chapter and rounding to one decimal place).