Selected accounts from the adjusted trial balance for Louise's Gourmet Shop as of March 31, 2011, the end of the current fiscal year. The merchandise inventory for Louise's Gourmet Shop was $38,200 at the beginning of the year and $29,400 at the end of the year.

Required

1. Using the information given, prepare a multistep income statement for Louise's Gourmet Shop. 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 the income statement for Louise's Gourmet Shop to evaluate the company's profitability? What other financial statements should you consider, andwhy?

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Loulse's Gourmet Shop Partial Adjusted Trial Balance March 31, 2011 5168,700 5,700 70,200 Sales Returns and Allowances Purchases Purchases Returns 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 2,600 2,300 33,125 12,875 23,800 2,400 1,300 1,560 2,880 1075 1,050