Following are selected accounts from the adjusted trial balance for Robert’s Shop, Inc., as of March 31, 2011, the end of the fiscal year.

The merchandise inventory for Robert’s Shop was $38,200 at the beginning of the year and $29,400 at the end of the year.

1. Using the information given, prepare an income statement for Robert’s Shop, Inc. 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 Robert’s Shop to evaluate the company’s profitability? What other financial statements should you consider and why?

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Robert's Shop, Inc. Partial Adjusted Trial Balance March 31,2011 168,700 ales 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 S 5,700 70,200 2,600 2,300 33,125 $12,875 23,800 2,400 1,300 1,560 2,880 1,075 1,050 800 1,000 Depreciation Expense Office Equipment Income Taxes