Best Company Sells Office Supplies Required: Prepare an Income Statement for Best Company, a Merchandiser

question 93

Essay

Best Company sells office supplies. The following information summarizes Best's operating activities for 2012:
$\begin{array}{|l|r|}\hline\text { Utilities for store } & \$ 6,000 \\\hline \text { Rent for store } & \$ 8,000 \\\hline \text { Sales commissions } & \$ 4,500 \\\hline \text { Purchases of merchandise } & \$ 54,000 \\\hline \text { Inventory on January } 1,2012 & \$ 30,000 \\\hline \text { Inventory on December } 31,2012 & \$ 20,500 \\\hline \text { Sales revenue } & \$ 108,000\\\hline\end{array}$

Required: Prepare an income statement for Best Company, a merchandiser, for the year ended December 31, 2012.using the format below. Please include a vertical analysis rounded to the nearest tenth of a percent.
$$\begin{array} { | l | l | l | l | } \hline \text { Sales revenue } & \quad\quad\quad &\quad\quad\quad &\quad\quad\quad \\\hline \text { Cost of goods sold } & & & \\\hline \text { Beginning inventory } & & & \\ \hline \text { Purchases } & & & \\\hline \text { Cost of goods available for sale } & & & \\\hline \text { Ending inventory } & & & \\\hline \text { Cost of goods sold } & & & \\\hline \text { Gross profit } & & & \\\hline \text { Selling expenses } & & & \\\hline \text { Sales commissions } & & & \\\hline \text { General expenses } & & & \\\hline \text { Rent expense } & & & \\\hline \text { Utilities expense } & & & \\\hline \text { Total operating expenses } & & & \\\hline \text { Net income/(loss) } & & & \\\hline\end{array}$$

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Definitions:

Real Exchange Rate

The rate at which goods and services of one country can be exchanged for those of another, adjusting for price level differences.

Trade Deficit

The economic condition that occurs when a country imports more goods and services than it exports.

Net Exports

The net amount obtained by subtracting a nation's total imports from its total exports.

Imports

Goods or services brought into one country from another for the purpose of being sold or used, contributing to the domestic supply of products.