Problem - The adjusted trial balance of Gertz Company included the following selected accounts:
Debit Credit
Sales $575,000
Sales Returns and Allowances $ 50,000
Sales Discounts 9,500
Cost of Goods Sold 347,000
Freight-out 2,000
Advertising Expense 15,000
Interest Expense 19,000
Store Salaries Expense 74,000
Utilities Expense 18,000
Depreciation Expense 3,500
Interest Revenue 25,000
Instructions -
(1) Use the above information to prepare a multiple-step income statement for the year ended December 31, 2007.
(2) Calculate the profit margin ratio and gross profit rate. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings.