Multiple-Step Income Statements
SPINX, INC. | |
STATEMENT OF EARNINGS | |
FOR THE YEAR ENDED DECEMBER 31, 2015 | |
Net sales | $4,395,253 |
Costs and expenses: |
|
Cost of goods sold | (2,821,455) |
Operating expenses | (1,004,396) |
Interest revenue | 15,797 |
Earnings before income tax | $ 585,199 |
Income tax expense | (204,820) |
Net earnings | $ 380,379 |
Earnings per share | $1.70 |
Comparative balance sheets report average total assets for the year of $2,575,000 and average total equity of $1,917,000 (dollar amounts in thousands, except earnings per share).
a. Prepare an income statement for the year in a multiple-step format.
b. Compute the ( 1 ) gross profit rate, ( 2 ) net income as a percentage of net sales, ( 3 ) return on assets, and ( 4 ) return on equity for the year. (Round computations to the nearest one-tenth of 1 percent.)
c. Explain why interest revenue is not included in the company’s gross profit computation.
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