10)

Assume a business provided the following excerpts from its balance sheet and income statement as shown below:

	Ending Balance	Beginning Balance
Current assets	$ 120,000	$ 140,000
Total assets	$ 480,000	$ 380,000
Current liabilities	$ 80,000	$ 70,000
Total liabilities	$ 174,600	$ 174,000
Total stockholders equity	$ 305,400	$ 206,000

Sales	$ 1,000,000
Cost of goods sold	600,000
Gross margin	400,000
Selling and administrative expenses	250,000
Net operating income	150,000
Interest expense	8,000
Net income before taxes	142,000
Income taxes	42,600
Net income	$ 99,400

In a common-size income statement, the percentage that would accompany interest expense would be closest to:

Multiple Choice

• 4.55%.

• 8.05%.

• 0.80%.

• 1.80%.