In its income statement for the year ended December 31, 2012, Misra Company reported the following condensed data.

Instructions

(a) Prepare a multiple-step income statement.

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

(c) In 2011, Misra had a profit margin ratio of 5%. Is the decline in 2012 a cause for concern? (Ignore income tax effects.)

Transcribed Image Text:

Administrative expenses $465,000 Cost of goods sold Interest expense Interest revenue Selling expenses Loss on disposal of plant assets 987,000 71,000 Net sales 65,000 Income tax expense 420,000 $ 83,500 2,050,000 25,000