Chapter 5, Problem 5.35AP

Preparing a single-step income statement, preparing a multi-step income statement, and computing the gross profit percentage

The records of Quality Cut Steak Company list the following selected accounts for the quarter ended April 30, 2016:

Interest Revenue	$ 500
Merchandise Inventory	45,300
Notes Payable, long-term	52,000
Salaries Payable	2,400
Sales Discounts	5,500
Sales Returns and Allowances	8,500
Sales Revenue	306,000
Rent Expense (Selling)	21,400
Office Supplies	6,300
Unearned Revenue	13,200
Interest Expense	1,700
Depreciation Expense-Equipment (Administrative)	1,300
Utilities Expense (Administrative)	4,300
Accounts Payable	$ 16,900
Accounts Receivable	38,000
Accumulated Depreciation-Equipment	36,800
Common Stock	32,000
Retained Earnings	10,200
Dividends	17,000
Cash	7,400
Cost of Goods Sold	160,600
Equipment	130,000
Interest Payable	1,000
Rent Expense (Administrative)	9,600
Utilities Expense (Selling)	10,600
Delivery Expense (Selling)	3,500

Requirements

1. Prepare a single-step income statement.

2. Prepare a multi-step income statement.

3. M. Doherty, manager of the company, strives to earn a gross profit percentage of at least 50%. Did Quality Cut achieve this goal? Show your calculations.