In its income statement for the year ended December 31, 2012, Misra Company reported the following condensed data.
|
Administrative expenses |
$465,000 |
Loss on disposal of |
|
|
Cost of goods sold |
987,000 |
plant assets |
83,500 |
|
Interest expense |
71,000 |
Net sales |
2,050,000 |
|
Interest revenue |
65,000 |
Income tax expense |
25,000 |
|
Selling expenses |
420,000 |
Instructions
(a) Prepare a multiple-step income statement.
(b) Calculate the profit margin ratio and gross profit rate.
(c) In 2011, Misra had a profit margin ratio of 5%. Is the decline in 2012 a cause for concern? (Ignore income tax effects.)