1. The following information is available for Shawson Ltd. for calendar 2018 (20 marks):

Cost of goods sold 595,000

Income tax expense 4,500

Interest expense 15,000

Interest revenue 19,000

Operating expenses 97,000

Sales $725,000

Sales returns and allowances 22,000

Instructions

(a) Use the above information to prepare a multiple-step income statement for the year ended December 31, 2018. (15 marks)

(b) Calculate the gross profit margin and the profit margin for 2018. (5 marks)