The following information applies to the questions displayed below. Emily's Greenhouse Corporation is a local greenhouse organized 10 years ago as a corporation. The bookkeeper prepared the following statement (assume that all amounts are correct, but note the incorrect terminology and format):

EMILY'S GREENHOUSE CORPORATION

Profit and Loss December 31

Debit Credit $766,000 Sales Cost of Goods Sold Sales Returns and Allowances Sales Discounts Salaries and Wages Expense Office Expense Travel Expenses Income Tax Expense Net Profit $383,000 18,200 17,600 108,000 31,000 9,000 59,760 139,440 Totals $766,000 $766,000

Required:

1. Prepare a properly formatted multistep income statement that would be used for external reporting purposes.

2. Compute and interpret the gross profit percentage (using the formula shown in this chapter and rounding to one decimal place).