Baskin-Robbins is one of the world's largest specialty ice cream shops. The company offers dozens of different flavors, from Very Berry Strawberry to low fat Espresso 'n Cream. Assume that a local Baskin-Robbins in Raleigh, North Carolina, has the following amounts for the month of July 2012.

Salaries expense............................$12,700

Sales revenue...............................$64,800

Inventory (July 1, 2012).....................1,800

Interest income................................2,300

Sales returns...................................1,200

Cost of goods sold..........................28,200

Utilities expense..............................3,100

Rent expense..................................5,700

Income tax expense...........................5,000

Interest expense.................................500

Inventory (July 31, 2012)....................1,200

Required:

1. Prepare a multiple-step income statement for the month ended July 31, 2012.

2. Calculate the inventory turnover ratio for the month of July. Would you expect this ratio to be higher or lower in December 2012? Explain.

3. Calculate the gross profit ratio for the month of July.