Problem

Multiple-Step Income StatementsSPINX, INC.STATEMENT OF EARNINGSFOR THE YEAR ENDED DECEMBER...

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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