An alphabetical list of Rikards Company adjusted accounts at its fiscal year end, August 31, 2021, follows. All accounts have normal balances.

Additional information:

1. Of the notes payable, $6,000 becomes due on February 17, 2022. The balance is due in 2023.

2. On July 18, 2021, R. Smistad invested $3,500 cash in the business.

Instructions

a. Prepare a multiple-step income statement, statement of owner?s equity, and classified balance sheet.

b. Calculate the gross profit margin and profit margin.

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Accounts payable Accumulated depreciation-equipment Accumulated depreciation-furniture $ 15,500 Notes payable Prepaid insurance R. Smistad, capital R. Smistad, drawings Rent expense Salaries expense Salaries payable $ 42,000 575 65,750 17,500 15,450 271,500 80,000 Cost of goods sold Depreciation expense Equipment 24,000 50,000 2,250 35,000 42,000 3,575 2,100 525 70,350 Furniture Insurance expense Interest expense Interest payable 465,000 Sales returns and allowances Supplies Supplies expense Unearned revenue 950 6,325 2,600 Merchandise inventory