Psang Inc. purchases its merchandise inventory on credit and uses a perpetual inventory system. The company commenced operations on January 1, 2015, and during 2015 purchased merchandise costing $300,000. Of this amount, 80% was paid in 2015 with the balance paid in 2016. The company sold 90% of its inventory for $540,000 on credit. Of this amount, 70% was collected in 2015 with the rest collected in 2016. Operating expenses of $120,000 were incurred in 2015 and all were paid by the end of the year. The income tax rate is 30% and all income taxes relating to 2015 were paid in 2016. The following table indicates key amounts on the 2015 financial statements:

______________________________2015

Income statement data

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

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

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

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

Profit before income tax..................[5]

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

Profit.........................................[7]

Statement of financial position data

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

Merchandise 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 profit before income tax (items 3, 4, and 5 above).

(d) Calculate the balances for Income Tax Expense, profit, 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?