21 Which of the following companies would most likely have the highest inventory tumover? a. An art gallery b. An automobile manufacturer. C. A piano manufacturer. d. A bakery 22 What is a difference between the profit margin and the gross profit rate? a. None, these are interchangeable terms. b. The gross profit rate is computed by dividing net sales by gross profit and the profit margin is computed by dividing net sales by net income. C. The gross profit rate will normally be higher than the profit margin ratio. d. A profit margin of 7% means that 7 cents of each net sales dollar ends up in net income and a gross profit rate of 7% means that the cost of the goods were 7% of the selling price. 23 The adjusted trial balance of McCoy Company included the following selected accounts: Debit Credit Sales Revenue $645,000 Interest Revenue 25,000 Cost of Goods Sold $396,000 Freight-Out 2,000 Advertising Expense 15,000 Interest Expense 19,000 Salaries and Wages Expense 84,000 Utilities Expense 23,000 Depreciation Expense 3,500 Sales Returns and Allowances 50,000 Sales Discounts 9,500 Income Tax Expense 15,000 Instructions 1. Use the above information to prepare a multiple-step income statement for the year ended December 31, 2014 2. Calculate the profit margin and gross profit rate. Grid paper is provided on the next page