Answer:
Net income -$268,000
Operating Cash Flow $511,000
Explanation:
A. Calculation for the Net income
INCOME STATEMENT
Sales $2,560,000
Cost of goods sold $1,364,000
Other expenses $685,000
Depreciation $477,000
EBIT $34,000
Interest $302,000
Taxable income -$ 268,000
($34,000-$302,000)
Taxes (24%) 0
Net income -$268,000
CALCULATION FOR EBIT
Sales $2,560,000
LESS:Cost of goods sold ($1,364,000)
Other expenses ($685,000)
Depreciation ($477,000)
EBIT $34,000
Based on the information given we were told that we should ignore any tax loss which was why Taxes (24%) was $0
The taxes are zero since we are ignoring any carryback or carryforward provisions.
Therefore NET INCOME is -$268,000
B. Calculation for operating cash flow
Using this formula
Operating Cash Flow = EBIT + Depreciation - Taxes
Let plug in the formula
Operating Cash Flow= $34,000 + $477,000 - 0
Operating Cash Flow = $511,000
Therefore Operating Cash Flow is $511,000
