The following information is available for Labrador Ltd. for calendar 2022: Cost of goods sold........................................................ ...

The following information is available for Labrador Ltd. for calendar 2022:

Cost of goods sold........................................................ 1,190,000

Income tax expense...................................................... 9,000

Interest expense............................................................ 30,000

Interest income.............................................................. 38,000

Operating expenses...................................................... 194,000

Sales............................................................................. $1,406,000

Instructions

(a) Use the above information to prepare a multiple-step statement of income for the year ended December 31, 2022.

(b) Calculate the gross profit margin and the profit margin for 2022.

Expert Solution

Solution: A
	MULTIPLE STEP - INCOME STATEMENT
		Amount	Amount
	Sales		$ 1,406,000

	Less: Cost of Goods Sold		$ 1,190,000

	Gross Margin		$ 216,000

	Less: Operating Expenses		$ 194,000

	Operating Profit		$ 22,000

	Other Income (Expenses)
	Interest Expenses	$ -30,000
	Interest Income	$ 38,000
			$ 8,000

	Pre Tax Income		$ 30,000

	Income Tax Expenses		$ 9,000

	Net Income		$ 21,000

Solution: B

	Gross Margin = $ 216,000 / $ 1,406,000 =	15.36%

	Profit Margin = $ 21,000 / $ 1,406,000 =	1.49%

ekkarill92 answered 8 months ago

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