Income Statement and Retained Earnings The Cobler Company uses a periodic inventory system and presents the following partial list of account balances taken from its December 31, 2007 adjusted trial balance:
|
Operating expenses |
$35,800 |
|
Dividend revenue |
1,000 |
|
Retained earnings, January 1, 2007 |
68,700 |
|
Sales (net) |
139,600 |
|
Common stock, $15 par |
$45,000 |
|
Merchandise inventory, January 1, 2007 |
24,000 |
|
Purchases (net) |
79,200 |
The following information is also available for 2007 and is not reflected in the preceding accounts:
1. The common stock has been outstanding for the entire year. A cash dividend of $0.84 per share was declared and paid.
2. The income tax rate on all items of income is 30%.
3. The ending merchandise inventory is $27,300.
4. A pretax $4,000 loss was recognized on the sale of Division X (a component of the company). This division had earned a pretax operating income of $1,900 during 2007.
5. Damaged inventory was written off at a pretax loss of $6,600.
6. An earthquake, which is an unusual and infrequent event in the area, caused a $3,700 pretax loss.
Required
1. Prepare a cost of goods sold schedule for Cobler Company.
2. Prepare a 2007 single step income statement.
3. Prepare a 2007 retained earnings statement.
4. Compute the 2007 profit margin (net income X net sales).