compute the 2007 profit margin net income x net sales 563049

Income Statement and Retained Earnings The Cobler Company uses a periodic inventory system and presents the following partial list of account balances taken from its December 31, 2007 adjusted trial balance:

Operating expenses


Dividend revenue


Retained earnings, January 1, 2007


Sales (net)


Common stock, $15 par


Merchandise inventory, January 1, 2007


Purchases (net)


The following information is also available for 2007 and is not reflected in the preceding accounts:

1. The common stock has been outstanding for the entire year. A cash dividend of $0.84 per share was declared and paid.

2. The income tax rate on all items of income is 30%.

3. The ending merchandise inventory is $27,300.

4. A pretax $4,000 loss was recognized on the sale of Division X (a component of the company). This division had earned a pretax operating income of $1,900 during 2007.

5. Damaged inventory was written off at a pretax loss of $6,600.

6. An earthquake, which is an unusual and infrequent event in the area, caused a $3,700 pretax loss.


1. Prepare a cost of goods sold schedule for Cobler Company.

2. Prepare a 2007 single step income statement.

3. Prepare a 2007 retained earnings statement.

4. Compute the 2007 profit margin (net income X net sales).

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