Wolcott Warehouse Store has an August 31 fiscal year end and uses a perpetual inventory system. An alphabetical list of its account balances at August 31, 2017, follows. All accounts have normal balances.

Additional information:
1. All adjustments have been recorded and posted except for the inventory adjustment. According to the inventory count, the company has $54,700 of merchandise on hand.
2. Last year Wolcott Warehouse Store had a gross profit margin of 20% and a profit margin of 9%.
Instructions
(a) Prepare any additional required adjusting entries and update account balances.
(b) Prepare a single-step income statement.
(c) Calculate gross profit margin and profit margin. Compare with last year's margins and comment on the results.
(d) Prepare the closing entries. Post to the Income Summary account. Before closing the Income Summary account, check that the balance is equal to profit.

Transcribed Image Text:

Accounts payable Accounts receivable $ 960 Merchandise inventory Accumulated depreciation Notes receivable 1 2 Cost of goods sold Depreciation expense Sales returns and allowances Supplies expense Unearned revenue e expense Interest expense