1. Question Content Area

Asset turnover ratio

Financial statement data for years ended December 31, 20Y3 and 20Y2, for Edison Company follow:

	20Y3		20Y2
Sales	$1,738,000		$1,522,500
Total assets:
Beginning of year	780,000		670,000
End of year	800,000		780,000

a.	Determine the asset turnover ratio for 20Y3 and 20Y2. Round answers to one decimal place.

	20Y3		20Y2
Asset turnover	fill in the blank 1		fill in the blank 2

b.	Is the change in the asset turnover ratio from 20Y2 to 20Y3 favorable or unfavorable?

FavorableUnfavorable

2.

Multiple-Step Income Statement

On March 31, 20Y9, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture store, are as follows:

Accounts Receivable	$170,000		Inventory	$1,027,800
Accumulated DepreciationBuilding	733,700		Notes Payable	314,400
Administrative Expenses	533,550		Office Supplies	20,750
Building	2,396,600		Retained Earnings	1,312,950
Cash	171,900		Salaries Payable	8,350
Common Stock	314,350		Sales	6,123,100
Cost of Goods Sold	3,943,650		Selling Expenses	719,850
Dividends	168,450		Store Supplies	88,550
Interest Expense	10,000

Question Content Area

a. Prepare a multiple-step income statement for the fiscal year ended March 31, 20Y9.

Royal Furnishings Company Income Statement For the Year Ended March 31, 20Y9

CashCommon StockDividendsInventorySales		$- Select -
CashCost of goods soldInterest ExpenseNote PayableSales		- Select -
Gross profit		$fill in the blank 512d75fab03800c_5
Expenses:
Cost of goods soldInterest expenseSales discountsSales returns and allowancesSelling expenses	$- Select -
Accumulated depreciation-buildingAdministrative expensesCost of goods soldNotes payableSales returns and allowances	- Select -
Total expenses		fill in the blank 512d75fab03800c_10
Gross profitNet incomeNet lossOperating incomeOperating loss		$- Select -
Other expense:
Administrative expensesBuildingCommon StockInterest expenseOffice Supplies		- Select -
Gross profitNet incomeNet lossOperating incomeOperating loss		$- Select -

Question Content Area

b. What is a major advantage of the multiple-step income statement over the single-step income statement?

The multiple-step income statement clearly presents the value of total expenses.The multiple-step income statement clearly presents the value of total revenues.The multiple-step income statement is less complex to prepare.The multiple-step income statement shows the relationship of gross profit to sales.