Use your knowledge of income statements to fill in the missing items:

Sales
Cost of goods sold $575,000

Gross profit $1,600,000

General and administrative expense $200,000

Selling and marketing expense $

Depreciation $50,000

Operating income $

Interest $100,000

Income before taxes $

Income taxes (30%) $

Net income $700,000

To fill in the missing items in the income statement, we can follow the basic structure of the income statement.

1. Start with Sales: We are not given the sales amount, so we can't determine the missing value. Sales is typically the first item on an income statement and represents the total revenue generated from selling goods or services.

2. Cost of Goods Sold: The given value is $575,000, which represents the direct costs incurred to produce the goods that were sold.

3. Gross Profit: We are given a gross profit of $1,600,000. To calculate this, we subtract the Cost of Goods Sold from the Sales. Therefore, the missing Sales value can be determined by adding the Cost of Goods Sold to the Gross Profit:
Sales = Gross Profit + Cost of Goods Sold
Sales = $1,600,000 + $575,000

4. General and Administrative Expense: The given value is $200,000, which represents the expenses associated with running the overall business operations.

5. Selling and Marketing Expense: The missing value represents the expenses related to selling and marketing efforts. To find this, we subtract the Gross Profit, General and Administrative Expense, and Depreciation from the calculated Sales:
Selling and Marketing Expense = Sales - Gross Profit - General and Administrative Expense - Depreciation

6. Depreciation: The given value is $50,000, which represents the gradual decrease in the value of assets over time.

7. Operating Income: To find the missing value, we subtract the General and Administrative Expense, Selling and Marketing Expense, and Depreciation from the Gross Profit:
Operating Income = Gross Profit - General and Administrative Expense - Selling and Marketing Expense - Depreciation

8. Interest: The given value is $100,000, which represents the interest expense incurred on borrowed funds.

9. Income before Taxes: To find the missing value, we subtract the Interest from the Operating Income:
Income before Taxes = Operating Income - Interest

10. Income Taxes (30%): The missing value represents the income taxes paid for the income before taxes. We can calculate this by multiplying the Income before Taxes by the tax rate of 30%:
Income Taxes = Income before Taxes * Tax Rate

11. Net Income: The given value is $700,000, which represents the final profit after taxes. To find this, we subtract the Income Taxes from the Income before Taxes:
Net Income = Income before Taxes - Income Taxes

Now we can calculate the missing values:
Sales = $1,600,000 + $575,000
Selling and Marketing Expense = Sales - Gross Profit - General and Administrative Expense - Depreciation
Operating Income = Gross Profit - General and Administrative Expense - Selling and Marketing Expense - Depreciation
Income before Taxes = Operating Income - Interest
Income Taxes = Income before Taxes * Tax Rate
Net Income = Income before Taxes - Income Taxes