Problem
Toys "R" Us sells a variety of children's toys, games, books, and accessories. Assume that a local store has the following amounts for the month of March 2018.
|
Sales revenue
|
$77,300
|
Inventory (Mar. 31, 2018)
|
$1,000
|
|
Advertising expense
|
6,400
|
Insurance expense
|
2,300
|
|
Rent expense
|
4,300
|
Sales discounts
|
3,000
|
|
Gain on sale of building
|
7,500
|
Salaries expense
|
9,400
|
|
Inventory (Mar. 1, 2018)
|
2,800
|
Income tax expense
|
4,200
|
|
Cost of goods sold
|
35,800
|
|
|
Required:
1. Prepare a multiple-step income statement for the month ended March 31, 2018.
2. Calculate the inventory turnover ratio for the month of March. Would you expect this ratio to be higher or lower in December 2018? Explain.
3. Calculate the gross profit ratio for the month of March.