Question

The adjusted trial balance of Crane Company included the following selected accounts: Debit Credit Sales Revenue $659.000 $60,000 Sales Returns and Allowances Sales Discounts 10,000 Cost of Goods Sold 394,000 Freight-Out 2,800 Advertising Expense 10,600 Interest Expense 24.000 Salaries and Wages Expense 82.000 Utilities Expense 23,000 Depreciation Expense 3.700 Interest Revenue 26,300 Use the above information to prepare a multiple-step income statement for the year ended December 31, 2022. (List other revenues before other expenses.) CRANE COMPANY Income Statement $ $ eTextbook and Media List of Accounts Calculate the profit margin and gross profit rate. (Round answers to 1 decimal places, eg. 15.2%.) Profit margin % Gross profit rate

Answer 1

Multi step income statement

Net sales
Sales revenue		659,000
Less:
Sales returns and allowances	60,000
Sales discount	10,000
		- 70,000
Net sales		589,000
Cost of goods sold		- 394,000
Gross profit		195,000
Operating expenses:
Freight out	2,800
Advertising expense	10,600
Salaries and wages expense	82,000
Utilities expense	23,000
Depreciation expense	3,700
Total operating expenses		- 122,100
Operating profit		72,900
Other revenues
Interest revenue		26,300
Other expenses
Interest expense		- 24,000
Net income		$75,200

Profit margin = Net income/Net sales

= 75,200/589,000

= 12.8%

Gross profit rate = Gross profit/Net sales

= 195,000/589,000

= 33.1%

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