2.1 Income Statement Preparation. The following items are listed in alphabetical order. Please prepare an Income Statement from this information and then answer the additional questions:

A. What is the gross income and gross margin (gross income/sales)?

B. What is the operating income (earnings before interest and taxes) and operating margin (operating income/

sales)?

C. What items were not included on the income statement?

Why were they not included?

Item 2000 Administrative Expense $ 4,000 Administrative Salaries 2,500 Advertising Expense 5,000 Amortization of Goodwill 2,000 Consulting Expenses 500 Direct Labor 14,000 Dividend Payments 1,500 Income Tax Rate 40.0%

Interest Expense 3,000 Investment in New Plant 10,000 Manufacturing Depreciation 7,000 Manufacturing Overhead 6,000 Other Administrative Expense 1,000 Promotional Expenses 5,000 Raw Material Expense 38,000