Hendry's Boutique is a retail clothing store for women. The store operates out of a rented building in Storm Lake, Iowa. The following is the store's adjusted year-end trial balance dated December 31, current year.

Instructions
a. Prepare an income statement for Hendry's Boutique dated December 31, current year.
b. Compute the store's gross profit margin as a percentage of net sales.
c. Do the store's customers seem to be satisfied with their purchases? Defend your answer.
d. Explain how you can tell that the business records inventory purchases net of any purchase discounts.
e. The store reports sales taxes payable of $3,840 in its adjusted trial balance. Explain why it does not report any sales taxes expense.
f. Which accounts appearing in the store's adjusted trial balance comprise its operating cycle?

Transcribed Image Text:

HENDRY'S BOUTIQUE ADJUSTED TRIAL BALANCE DECEMBER 31, CURRENT YEAR 3,120 21,000 2,160 1,080 49,200 串14.400 15,300 3,840 21,600 25,260 271,200 Sales returns and allowances .. ._. . .. ._. .. . . . .. . . . . .. .. . . .. .. 3,000 120,690 300 4,944 624 3,300 7,320 1,080 105,714 9,828 $351,600 $351,600