In its income statement for the year ended December 31 2017

In its income statement for the year ended December 31, 2017, Sandhill Co. reported the following condensed data.

Salaries and wages expenses     $697,500                             

Loss on disposal of plant assets $ 125,250

Cost of goods sold 1,480,500                     

Sales revenue   3,315,000

Interest expense 106,500                            

Income tax expense 37,500

Interest revenue 97,500                              

Sales discounts   240,000

Depreciation expense 465,000                  

Utilities expense 165,000

Prepare a multiple-step income statement.

Calculate the profit margin and gross profit rate. (Round answers to 1 decimal place, e.g. 15.2%.)

Profit Margin      ??? %

Gross profit rate ??? %

Calculate the profit margin and gross profit rate. (Round answers to 1 decimal place, e.g. 15.2%.)

Profit Margin      ??? %

Gross profit rate ??? %

Solution

MULTIPLE-STEP INCOME STATEMENT

SANDHILL CO

Income Statement

For the Year Ended December 31, 2017

Sales Revenue

Sales

$33,15,000

Less : Sales Discount

(240,000)

3,075,000

Less : Cost of goods sold

(14,80,500)

Gross Profit

1,594,500

Operating Expenses

Salaries and Wages

697,500

Depreciation expense

465,000

Utilities Expenses

165,000

Total Operating Expenses

(13,27,500)

Total Operating Income

267,000

Other Income / (Expenses)

Loss on disposal of plant assets

(125,250)

Interest Expenses

(106,500)

Interest Revenue

97,500

Total Other Expenses, Net

(134,250)

Net Income Before Tax

132,750

Less : Income Tax Expenses

(37,500)

Net Income after Tax

95,250

Profit Margin = [Net Income / Net Sales] x 100

= [$95,250 / 30,75,000] x 100

= 3.1%

Gross profit rate = [Gross Profit / Net Sales ] x 100

= [$15,94,500 / 30,75,000] x 100

= 51.9%

SANDHILL CO
Income Statement
For the Year Ended December 31, 2017
Sales Revenue
Sales	$33,15,000
Less : Sales Discount	(240,000)	3,075,000
Less : Cost of goods sold		(14,80,500)
Gross Profit		1,594,500
Operating Expenses
Salaries and Wages	697,500
Depreciation expense	465,000
Utilities Expenses	165,000
Total Operating Expenses		(13,27,500)
Total Operating Income		267,000
Other Income / (Expenses)
Loss on disposal of plant assets	(125,250)
Interest Expenses	(106,500)
Interest Revenue	97,500
Total Other Expenses, Net		(134,250)
Net Income Before Tax		132,750
Less : Income Tax Expenses		(37,500)
Net Income after Tax		95,250