In its income statement for the year ended December 31, 2014, Gavin 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 2013, Gavin had a profit margin of 5%. Is the decline in 2014 a cause for concern?

(Ignore income tax effects.)

AppendixLO1