Question

Question 5 --/1 View Policies Current Attempt in Progress In its income statement for the year ended December 31, 2017, Crane Company reported the following condensed data. Salaries and wages expenses Cost of goods sold Interest expense Interest revenue Depreciation expense $450,000 Loss on disposal of plant assets 1,231,200 Sales revenue 69,000 Income tax expense 102,700 Sales discounts 310,000 Utilities expense $83,500 2,410,000 25,000 130,000 100,000

Answer 1

Crane company

Income statement

For the year ended December 31, 2017

Particulars	$	$
Operating income
Sales revenue		2,410,000
Less: Sales discount		130,000
Net sales revenue		2,280,000
Less: Cost of goods sold		1,231,200
Gross profit		1,048,800
Less: Operating expenses
Salaries and wages	450,000
Depreciation expenses	310,000
Utilities expenses	100,000
Total operating expenses		860,000
Operating profit ( GP - Total operating expenses)		188,800
Add: Non operating income
Interest revenue		102,700
Less: Non operating expenses
Interest expenses	69,000
Loss on disposal of plant assets	83,500
		152,500
Net Profit before tax		139,000
Less: Income tax expenses		25,000
Net Profit after tax		114,000

Profit margin = [Net profit after tax / Net sales revenue] X 100 %

Profit margin = [ $ 114,000 / $ 2,280,000] X 100% = 5%

Gross profit rate = [ gross  profit / net sales revenue ] X 100%

Gross profit rate = [ $ 1,048,800/ $ 2,280,000] X 100% = 46%