Parkland Department Store is located near the Lyndale Shopping Mall. At the

end of the company’s fiscal year on December 31, 2012, the following accounts appeared in its adjusted trial balance.

Accounts Payable $ 73,300

Accounts Receivable 45,500

Accumulated Depreciation”Buildings 52,500

Accumulated Depreciation”Equipment 42,600

Buildings 190,000

Cash 28,000

Common Stock 140,000

Cost of Goods Sold 412,000

Depreciation Expense 23,400

Dividends 15,000

Equipment 100,000

Gain on Disposal of Plant Assets 4,300

Income Tax Expense 15,000

Insurance Expense 8,400

Interest Expense 7,000

Interest Payable 2,000

Inventory 43,000

Mortgage Payable 62,500

Prepaid Insurance 2,400

Maintenance and Repairs Expense $ 6,200

Retained Earnings 19,200

Salaries and Wages Expense 111,000

Sales Revenue 626,000

Salaries and Wages Payable 3,500

Sales Returns and Allowances 8,000

Utilities Expense 11,000

Additional data: $20,000 of the mortgage payable is due for payment next year.


(a) Prepare a multiple-step income statement, a retained earnings statement, and a classified balance sheet.

[ (a) Net income $28,300, Tot. assets $313,800 ]

(b) Calculate the profit margin ratio and the gross profit rate.

(c) The vice president of marketing and the director of human resources have developed a proposal whereby the company would compensate the sales force on a strictly commission basis. Given the increased incentive, they expect net sales to increase by 25%. As a result, they estimate that gross profit will increase by $50,500 and expenses by $27,800. Compute the expected new net income. (Hint: You do not need to prepare an income statement.) Then, compute the revised profit margin ratio and gross profit rate. Comment on the effect that this plan would have on net income

and the ratios, and evaluate the merit of this proposal.

Do you have any solution for this problem… Especially for A part… Can you show me exact solutions for (a) Net income $28,300, Tot. assets $313,800…