Presented below is information for Yates Co. for the month of January 2010.

Cost of goods sold ........$212,000

Freight-out ............ 7,000

Insurance expense ......... 12,000

Salary expense ........... 62,000

Rent expense ........... $32,000

Sales discounts ........... 8,000

Sales returns and allowances ..... 17,000

Sales ............... 370,000

Instructions

(a) Prepare an income statement using the format presented on page 239. Assume a 25% tax rate.

(b) Calculate the profit margin ratio and the gross profit rate.