P7-5B The ledgers of Campo Leathers Inc. contain the following balances as

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P7-5B The ledgers of Campo Leathers Inc. contain the following balances as of January 31, 2008 (its year-end).

Advertising expense $ 130,000
Depreciation expense
(administrative) 53,000
Freight-in 27,900
Freight-out 6,800
Gain on the sale of equipment 8,500
Insurance expense 57,000
Interest expense 13,600
Interest revenue 7,000
Inventory, February 1, 2007 296,400
Inventory, January 31, 2008 303,400
Managerial salaries 129,800
Miscellaneous administrative
expenses 22,200
Miscellaneous selling expenses 39,000
Net purchases 1,697,000
Net sales 2,660,000
Rent expense 81,000
Sales staff wages 155,000
Utilities expense 30,300

Income taxes are calculated at 30 percent of income. Campo had 84,000 shares of common stock outstanding for the entire year. Total assets amounted to $5,460,000, and common stockholders’ equity was $1,966,200 at year end.

Instructions
(a) Prepare in good form a multiple-step income statement for Campo Leathers Inc.

(b) Calculate three measures of profitability and one ratio of solvency.

(c) Assume that you are considering supplying Campo Leathers with a line of wallets, key holders, and other small leather goods for sale in its two stores. Is this a company for which you would like to be a supplier? What additional information would you like to have before deciding to become a supplier for Campo Leathers?