Psang Inc. purchases its inventory on credit and uses a perpetual inventory system. The company began operations on January 1, 2018, and during 2018 purchased merchandise costing $300,000. Of this amount, 80% was paid in 2018 with the balance paid in 2019. The company sold 90% of its inventory for $540,000 on credit. Of this amount, 70% was collected in 2018 with the rest collected in 2019. Operating expenses of $120,000 were incurred in 2018 and all were paid by the end of the year. The income tax rate is 30% and all income taxes relating to 2018 were paid in 2019. The following table indicates key amounts on the 2018 financial statements:

__________________________________2018

Income statement data

Sales...............................................................[1]

Cost of goods sold.........................................[2]

Gross profit....................................................[3]

Operating expenses........................................[4]

Income before income tax..............................[5]

Income tax expense........................................[6]

Net income.....................................................[7]

Statement of financial position data

Accounts receivable........................................[8]

Inventory.........................................................[9]

Accounts payable..........................................[10]

Income tax payable.......................................[11]

Instructions

(a) Calculate the balances for Sales and Accounts Receivable (items 1 and 8 above).

(b) Calculate the balances for Cost of Goods Sold, Merchandise Inventory, and Accounts Payable (items 2, 9, and 10 above).

(c) Calculate the gross profit, the balance in Operating Expenses, and the income before income tax (items 3, 4, and 5 above).

(d) Calculate the balances for Income Tax Expense, net income, and Income Tax Payable (items 6, 7, and 11 above).

(e) Calculate the gross profit margin and profit margin for the company. All companies in this industry sell their products at approximately the same price and incur income tax at the same rate. If the company's gross profit margin and profit margin are higher than the industry average, what are the most likely explanations for this?