PROBLEM 6.2AHendry's Boutique is a retail clothing store for women. The store operates out of a rented building in StormLake, lowa. Shown below is the store's adjusted year-end trial balance dated December 31, 2011.HENDRY'S BOUTIQUEADJUSTED TRIAL BALANCEDECEMBER 31, 2011Cash ..$ 15,200Accounts receivable2,600Merchandise inventory17,500Prepaid rentOffice suppliesOffice equipmentAccumulated depreciation: office equipmentAccounts payableSales taxes payableCapital stockRetained earningsSales ....1,80090041,000$ 12,00012,7503,20018,00021,050226,000Sales returns and allowances2,500Cost of goods sold100,575Purchase discounts lost250Utilities expenseOffice supply expenseDepreciation expense: office equipmentRent expenseInsurance expenseSalaries expenseIncome taxes expense4,1205202,7506,10090088,0958,190$293,000 $293,000Instructionsa. Prepare an income statement for Hendry's Boutique dated December 31, 2011.b. Compute the store's gross profit margin as a percentage of net sales.Do the store's customers seem to be satisfied with their purchases? Defend your answer.c.d. Explain how you can tell that the business records inventory purchases net of any purchasediscounts.The store reports sales taxes payable of $3,200 in its adjusted trial balance. Explain why itdoes not report any sales taxes expense.е.f.Which accounts appearing in the store's adjusted trial balance comprise its operating cycle?

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Instructions a. Prepare an income statement for Hendry's Boutique dated December 31, 2011. b. Compute the store's gross profit margin as a percentage of net sales. c. Do the store's customers seem to be satisfied with their purchases? Defend your answer.

Instructions a. Prepare an income statement for Hendry's Boutique dated December 31, 2011. b. Compute the store's gross profit margin as a percentage of net sales. c. Do the store's customers seem to be satisfied with their purchases? Defend your answer.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter6: Merchandising Transactions

Section: Chapter Questions

Problem 1PA: Record journal entries for the following transactions of Furniture Warehouse. A. Aug. 3: Sold 15...

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Question

PROBLEM 6.2A
Hendry's Boutique is a retail clothing store for women. The store operates out of a rented building in Storm
Lake, lowa. Shown below is the store's adjusted year-end trial balance dated December 31, 2011.
HENDRY'S BOUTIQUE
ADJUSTED TRIAL BALANCE
DECEMBER 31, 2011
Cash ..
$ 15,200
Accounts receivable
2,600
Merchandise inventory
17,500
Prepaid rent
Office supplies
Office equipment
Accumulated depreciation: office equipment
Accounts payable
Sales taxes payable
Capital stock
Retained earnings
Sales ....
1,800
900
41,000
$ 12,000
12,750
3,200
18,000
21,050
226,000
Sales returns and allowances
2,500
Cost of goods sold
100,575
Purchase discounts lost
250
Utilities expense
Office supply expense
Depreciation expense: office equipment
Rent expense
Insurance expense
Salaries expense
Income taxes expense
4,120
520
2,750
6,100
900
88,095
8,190
$293,000 $293,000
Instructions
a. Prepare an income statement for Hendry's Boutique dated December 31, 2011.
b. Compute the store's gross profit margin as a percentage of net sales.
Do the store's customers seem to be satisfied with their purchases? Defend your answer.
c.
d. Explain how you can tell that the business records inventory purchases net of any purchase
discounts.
The store reports sales taxes payable of $3,200 in its adjusted trial balance. Explain why it
does not report any sales taxes expense.
е.
f.
Which accounts appearing in the store's adjusted trial balance comprise its operating cycle?

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