Preparing a Multistep Income Statement with Sales Discounts and Sales Returns and Allowances and Computing the Gross Profit Percentage Psymon Company, Inc., sells construction equipment. The annual fiscal period ends on December 31. The following adjusted trial balance was created from the general ledger accounts on December 31:

Required:
1. Prepare a multistep income statement that would be used for internal reporting purposes. Treat Sales Discounts and Sales Returns and Allowances as contra-revenue accounts, and report all expenses separately.
2. Prepare a multistep income statement that would be used for external reporting purposes, beginning with the amount for Net Sales.
3. Compute and interpret the gross profit percentage (using the formula shown in this chapter and rounding to one decimal place).

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Account Titles Cash Accounts Receivable nventory Pr Accumulated Depreciation Liabilities Common Stock Debits 42,000 18,000 65,000 Credits S 21,000 30,000 0,000 11.600 182,000 Sales Rewenue Sales Returns and Allowances Sales Discounts Cost of Goods Sold Salaries and Wages Expense Office Expense 7.000 8.000 8,000 17.000 18,000 2,000 ,600 $334600 Income lax Expense Totals $334,600