Name: Exercise: E5-8, Prepare multiple-step income statement and calculate profitability ratios, File 5e-8 Course: Date: In its income statement for the year ended December 31, 2007, Knitz Company reported the following condensed data. Administrative expenses $435,000 Selling expenses 690,000 Cost of goods sold 987,000 Loss on sale of equipment 83,500 Interest expense 68,000 Net sales 2,350,000 Interest revenue 45,000 Instructions (a) Prepare a multiple-step income statement. KNITZ COMPANY Income Statement December 31, 2007 Account Title Amount Account Title Amount Title Formula Title Account Title Amount Account Title Amount Formula Title Formula Title Account Title Amount Title Account Title Amount Title Formula (b)(1) Calculate the profit margin ratio. Title Amount = = Formula Title Amount (b)(2) Calculate the gross profit rate. Title Amount = = Formula Title Amount (c) In 2006 Knitz had a profit margin ratio of 9%. Is the decline in 2007 a cause for concern? Enter text answer here. 129d9ef0-cd91-4c74-a8b6-e2cb2ceb78b4.xls, Page 1 of 3, 3/24/2012, 5:59 PM Instructions for the Microsoft Excel Templates Be advised, the worksheet and workbooks are not protected. Extensive detail and information is contained within the manual. Striking the "F1" key or following the path "Windows>Excel Help" will invoke the Office Assistant and bring up one of several help menus. You should enter your name, course ID, and date into the cells at the top of the page. Each page contains a page footer with file name, Page # of Page ##, date, and time to assist in assembly of multiple pages. Each worksheet contains the identification of the problem or exercise. All formatting should have been accomplished to provide satisfactory presentation. See the text for additional assistance in formating. If more than one page is required by the problem, the page breaks are preset. In general, the yellow highlighted cells are the cells which work and effort should be presented. Place the proper account title in the cell where the word "Account title" appears on the template. Place the value in the cell where the word "Value" or "Amount" appears on the template. A formula may be placed in some of these cells. Write a formula into cells where the word "Formula" appears. In these cells, an amount calculated can be entered. An amount can be placed in these cells. Place the explanation for the entry in the cell where the word "Text Explanation" appears on the template. Insert the account number where "Acct Nbr" appears on the template during posting. Insert the journal reference where "JOURN #" appears on the template during posting. Insert the title in the cell where "TITLE" appears on the template. The print area is defined to fit onto 8 1/2" X 11" sheets in portrait or landscape mode as required. The gray filled cells define the perimeter of the problem and the print area. The problem is formatted for whole dollars with comma separations (no cents) except where required. The display may have "Freeze Pane" invoked so column titles remain visible during data entry. Negative values may be shown as ($400) or -$400. Consider using "Split" panes to assist in copy and paste of data. Much of the exercises and problems can have data entered by the "look to" or "=A34" type formula where cell A34 contains the data to be entered. This precludes typing and data entry errors.