1. Use the data in Problem 5-6B to prepare Sterling Building Supplies' multi-step income statement for the year ended July 31, 2017.

2. Bev Sterling, owner of the company, strives to earn a gross margin of at least 50 percent and a net income of 20 percent (Net income percentage = Net income ÷ Net sales revenue). Did Sterling Building Supplies achieve these goals? Show your calculations.

In Problem 5-6B

Selected accounts of Sterling Building Supplies at July 31, 2017, are listed in alphabetical order below. For simplicity, all operating expenses are summarized in the accounts Selling Expenses and General Expenses. Sterling Building Supplies uses the perpetual inventory system.

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Accounts Payable Accounts Receivable.... Accumulated Amortization_ 31,000 78,500 Notes Payable, Long-Ter..250,000 Inventory: July 31, 2017.. $262,500 Salaries Payable 11,500 12,500 Store Equipment B. Sterling, Capital B. Sterling, Withdrawals..41,150 Cash Cost of Goods Sold... General Expenses Interest Expense Interest Payable Interest Revenue 30,750 Sales Discounts 451,700 Sales Returns and Allowances 26,400 945,600 158,625 242,000 8,100 37,400 ,100 Sales Revenue ...803,000 Selling Expenses 122,125 Store Equipment 5,100 Supplies 4,400 Unearned Sales Revenue... 750