Question

The following amounts appeared on Plymouth Electronics’ adjusted trial balance as of December 31, 2020.

	Debit			Credit
Merchandise inventory	$	19,200
Other assets		484,785
Liabilities				$	309,370
Celine Plymouth, capital					245,790
Celine Plymouth, withdrawals		66,700
Sales					939,000
Sales discounts		14,280
Sales returns and allowances		5,415
Interest income					690
Cost of goods sold		717,500
Sales salaries expense		78,900
Office salaries expense		56,200
Rent expense, selling space		32,700
Rent expense, office space		2,700
Store supplies expense		1,590
Office supplies expense		720
Depreciation expense, store equipment		8,610
Depreciation expense, office equipment		2,460
Insurance expense		2,460
Totals	$	1,494,850		$	1,494,850

Required:
1. Prepare a 2020 classified multiple-step income statement for Plymouth Electronics.

	PLYMOUTH ELECTRONICS Income Statement For Year Ended December 31, 2020 0 Operating expenses: Selling expenses: Total selling expenses $0 General and administrative expenses: Total general and administrative expenses $0 Total operating expenses 0 Other revenues and expenses: $0

2. Prepare a single-step income statement.

	PLYMOUTH ELECTRONICS Income Statement For Year Ended December 31, 2020 Revenues: Total revenues $0 Expenses: Total expenses 0

Analysis Component:
Calculate the gross profit ratio for the year ended December 31, 2020, and compare it to the prior year, commenting on whether the change was favourable or unfavourable. The gross profit ratio for Plymouth Electronics’ year ended December 31, 2019, was 32%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

	Gross profit ratio %

Answer 1

Please find the answer below. thanks!

PLYMOUTH ELECTRONICS
Income Statement
For Year Ended December 31, 2020
Sales		9,39,000
Less: Sales discount		14,280
Sales returns and allowances		5,415
Net sales			9,19,305
Cost of goods sold			7,17,500
Gross Profit			2,01,805
Operating expenses:
Selling expenses:
Sales salaries expense		78,900
Rent expense, selling space		32,700
Store supplies expense		1,590
Depreciation expense, store equipment		8,610
Total selling expenses		1,21,800
General and administrative expenses:
Office salaries expense		56,200
Rent expense, office space		2,700
Office supplies expense		720
Depreciation expense, office equipment		2,460
Total general and administrative expenses		62,080
Total operating expenses			1,83,880
Operating income			17,925
Other revenues and expenses:
Interest income		690
Insurance expense		-2,460
Total other revenues and expenses			-1,770
Net Income			16,155

PLYMOUTH ELECTRONICS
Income Statement
For Year Ended December 31, 2020
Revenues:
Sales		9,39,000
Interest income		690
Total revenues		9,39,690
Expenses:
Sales discount		14,280
Sales returns and allowances		5,415
Cost of goods sold		7,17,500
Sales salaries expense		78,900
Rent expense, selling space		32,700
Store supplies expense		1,590
Depreciation expense, store equipment		8,610
Office salaries expense		56,200
Rent expense, office space		2,700
Office supplies expense		720
Depreciation expense, office equipment		2,460
Insurance expense		2,460
Total expenses		9,23,535
Net Income		16,155
Gross Profit Ratio = Gross Profit/Revenue
Gross Profit		2,01,805
Revenue		9,19,305
Gross Profit Ratio		21.95%
Gross profit ratio for Plymouth Electronics’ year ended December 31, 2019, was 32%. Which means the change was unfavourable compared it to the prior year.