Baskin-Robbins is one of the world’s largest specialty ice cream shops. The company offers dozens of different flavors, from Very Berry Strawberry to lowfat Espresso ’n Cream. Assume that a local Baskin-Robbins in Raleigh, North Carolina, has the following amounts for the month of July 2021.Salaries expense             $13,700           Sales revenue         $69,800Inventory (July 1, 2021)      2,300           Interest income          3,300Sales returns                      1,100           Cost of goods sold   28,700Utilities expense                3,600           Rent expense              6,700Income tax expense          6,000            Interest expense           400                                                         Inventory (July 31, 2021) 1,100Required:1. Prepare a multiple-step income statement for the month ended July 31, 2021.2. Calculate the inventory turnover ratio for the month of July. Would you expect this ratio to be higher or lower in December 2021? Explain.3. Calculate the gross profit ratio for the month of July.

Question

Baskin-Robbins is one of the world’s largest specialty ice cream shops. The company offers dozens of different flavors, from Very Berry Strawberry to lowfat Espresso ’n Cream. Assume that a local Baskin-Robbins in Raleigh, North Carolina, has the following amounts for the month of July 2021.

Salaries expense             $13,700           Sales revenue         $69,800
Inventory (July 1, 2021)      2,300           Interest income          3,300
Sales returns                      1,100           Cost of goods sold   28,700
Utilities expense                3,600           Rent expense              6,700
Income tax expense          6,000            Interest expense           400
                                                         Inventory (July 31, 2021) 1,100

Required:
1. Prepare a multiple-step income statement for the month ended July 31, 2021.
2. Calculate the inventory turnover ratio for the month of July. Would you expect this ratio to be higher or lower in December 2021? Explain.
3. Calculate the gross profit ratio for the month of July.

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