You have been provided with the following selected accounts for Sparkles Inc. for the year ended June 30, 2012:

Sparkles conducted a physical inventory count on June 30, 2012. Inventory on hand at that date was determined to be $300,000.
Instructions
(a) Prepare a partial multiple-step income statement for the year ended June 30, 2012, through to gross profit.
(b) Calculate the gross profit margin. If the industry average gross profit margin is 26%, how does Sparkles' gross profit margin compare?

Transcribed Image Text:

Inventory, July 1, 2011 Purchases Accounts receivable Sales Purchase returns and allowances Freight in Administrative expenses Land 260,000 3,140,000 330,000 3,900,000 120,000 40,000 370,000 700,000 Sales discounts Interest expense Interest revenue Accounts payable Selling expenses Cash Common shares 50,000 10,000 20,000 270,000 60,000 250,000 150,000