Harry s Haberdashery is a retail clothing store for men The

Harry's Haberdashery is a retail clothing store for men. The store operates out of a rented
building in Albertsville, Virginia. Shown as follows is the store's adjusted year-end trial balance
dated December 31, current year.

Instructions

a. Prepare an income statement for Harry's Haberdashery dated December 31, current year.

b. Compute the store's gross profit margin as a percentage of net sales.

c. Do the store's customers seem to be satisfied with their purchases? Defend your answer.

d. Explain how you can tell that the business records inventory purchases net of any purchase
discounts.

e. The store reports sales taxes payable of $6,000 in its adjusted trial balance. Explain why it
does not report any sales taxes expense.

f. What is meant by the term operating cycle, and which accounts in the trial balance comprise
Harry's Haberdashery's operating cycle?

Harry s Haberdashery is a retail clothing store for men The

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