Chapter 6, Problem 2P

Selected accounts from Murray’s Furniture Store’s adjusted trial balance as of June 30, 2014, the end of the fiscal year, follow.

REQUIRED

1. 1. Prepare a multistep income statement for Murray’s. Freight-In should be combined with Cost of Goods Sold. Store Salaries Expense, Advertising Expense, Store Supplies Expense, and Depreciation Expense—Store Equipment are selling expenses. The other expenses are general and administrative expenses. The company uses the perpetual inventory system. Show details of net sales and operating expenses.
2. 2. BUSINESS APPLICATION ▶ Based on your knowledge at this point in the course, how would you use Murray’s income statement to evaluate the company’s profitability? What other financial statement should you consider and why?