Selected accounts from Dences Gourmet Shops adjusted trial balance as of March 31, 2014, the end of

Selected accounts from Dence’s Gourmet Shop’s adjusted trial balance as of March 31, 2014, the end of the current fiscal year, follow. The merchandise inventory for Dence’s was $81,222 at the beginning of the year and $76,664 at the end of the year.

Required

1. Prepare a multistep income statement for Dence’s. 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 periodic inventory system. Show details of net sales and operating expenses.

2. Based on your knowledge at this point in the course, how would you use Dence’s income statement to evaluate the company’s profitability? What other financial statements should you consider, andwhy?

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Dence's Gourmet Shop Partial Adjusted Trial Balance March 31,2014 Sales Sales Returns and Allowances Purchases Purchases Returms and Allowances Freight-In Store Salaries Expense Office Salaries Expense Advertising Expense Rent Expense Insurance Expense Utilities Expense Store Supplies Expense Office Supplies Expense Depreciation Expense-Store Equipment Depreciation Expense- Office Equipment 433,912 11,250 221,185 30,238 10,078 107,550 26,500 18,200 14,400 2,800 18,760 464 814 1,800 1,850