Presented below is information for Zales Co. for the month of January 2007.

Cost of goods sold $212,000 Rent expense $ 32,000 Freight-out 7,000 Sales discounts 8,000 Insurance expense 12,000 Sales returns and allowances 13,000 Salary expense 58,000 Sales 370,000 Instructions

(a) Prepare an income statement using the format presented on page 232.

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