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.)