Perry Corporation is a local grocery store organized seven years ago as a corporation. At that time, 10,000 common shares were issued to the three organizers. The store is in an excellent location, and sales have increased each year. At the end of 2015, the bookkeeper prepared the following statement (assume that all amounts are correct; note the incorrect terminology and format):

Required:
1. Beginning with net sales, prepare a multiple- step statement of earnings (showing both gross profit and earnings from operations). Treat sales discounts as a contra- revenue account
2. The beginning and ending balances of trade receivables were $ 16,000 and $ 18,000, respectively. Compute the gross profit percentage and receivables turnover ratio and explain their meaning.

Transcribed Image Text:

PERRY CORPORATION Profit and Loss December 31, 2015 Debit Credit $184,000 Cost of sales Sales returns and allowances Selling expensee Administrative and general expenses Bad debt expense Sales discounts Income tax expense Net earnings 98,000 9,000 17.000 18,000 10,900 Totals $184,000 $184.000