Presented below is information for Zhou Co. for the month of January 2014.

Exercise 5-6

E5-6 Presented below is information for Zhou Co. for the month of January 2014.

Cost of goods sold $212,000 Rent expense $ 32,000

Freight-out 7,000 Sales discounts 8,000

Insurance expense 12,000 Sales returns and allowances 20,000

Salaries and wages expense 60,000 Sales revenue 370,000

Instructions

(a)   Prepare an income statement using the format presented on page 245.  Assume a 25% tax rate.

(b)   Calculate the profit margin ratio and gross profit rate.