The following summarized data were provided by the records of Slate Inc. for the year ended December 31, 2014:
Sales of merchandise for cash ............$ 233,000
Sales of merchandise on credit ............ 40,000
Cost of sales .................... 146,000
Selling expenses .................. 47,200
Administrative expenses ................. 20,000
Sales returns and allowances .............. 8,000
Bad debt expense 1,200 Items not included in the above amounts:
Average income tax rate, 30%
Number of common shares outstanding, 4,500
Required:
1. Based on these data, prepare a multiple- step statement of earnings (showing both gross profit and earnings from operations).
2. What was the amount of gross profit? What was the gross profit percentage? Explain what these two numbers mean.