The accounts of MOGUL Skis as of June 30, 2021, are listed in alphabetical order below. For simplicity, all operating expenses are summarized in the accounts under Selling Expenses and General Expenses. MOGUL Skis uses the perpetual inventory system.
Requirements:
1. Prepare MOGUL Skis’ multiple-step income statement for the year ended June 30, 2021.
2. Prepare MOGUL Skis’ statement of owner’s equity as of June 30, 2021.
3. Prepare MOGUL Skis’ classified balance sheet in report format as of June 30, 2021.
4. Compute the gross margin percentage and the rate of inventory turnover for 2021 (rounded
to one decimal place). Inventory on hand one year ago was $785,000. For 2020, MOGUL’s gross margin was 35 percent and inventory turnover were 4.3 times during the year. Does the two-year trend in these ratios suggest improvements or deterioration in MOGUL’s profitability?