Answer:
a) Operating Income = $73,000
b) Net income before income tax = $25,500
Explanation:
First part of the question is to determine the operating income or loss of the business
It is calculated as follows
Particulars Amount
Sales Revenue $460,000
Subtract: Cost of goods sold ($240,000)
General and Administrative exp. ($56,000)
Restructuring Costs ($58,000)
Selling Expenses ($33,000)
Operating Income $73,000
Second part is to determine the income or loss before income taxes
Particulars Amount
Operating Income $73,000
Add: Interest Revenue $6,500
Deduct:Loss on sales of investment ($54,000)
Income before Income Tax $25,500
Finally, the Net Income or loss after Income tax
$25,500 x .25 = $6,375
