In its income statement for the year ended December 31, 2017, Darren Company reported the following condensed data.
Salaries and wages Loss on disposal of plant
Expense........................$465,000......................assets...................$ 83,500
Cost of goods sold.............987,000.............Sales revenue..................2,210,000
Interest expense..................71,000......Income tax expense.....................25,000
Interest revenue..................65,000............Sales discounts...................160,000
Depreciation expense.........310,000..........Utilities expense...................110,000
Instructions
(a) Prepare a multiple-step income statement.
(b) Calculate the profit margin and gross profit rate.
(c) In 2016, Darren had a profit margin of 5%. Is the decline in 2017 a cause for concern? (Ignore income tax effects.)