Question

The following financial information was summarized from the accounting records of Globe Corporation for the current year ended December 31: Northern Southern Corporate Division Division Total Cost of goods sold $310,000 $175,000 Direct operating expenses 250,000 115,000 Net sales 600,000 410,000 Interest expense $12,000 General overhead 101,000 Income tax 26,700 The net income for Globe Corporation is

Answer 1

Answer:

Net Income = $20,300

Explanation:

Net income is profit earned after deducting all operating expenses and taxes from sales revenue. It is computed as follows:

                                                                                                $

Total sales      (600,000 + 410,000)                                  1,010,000

less cost of goods sold (310,000 + $175,000)                 (485,000 )

Gross profit                                                                           525,000

Direct operating expenses(250,000 +115,000)                 (365000 )

General overhead                                                                 (101,000)

Interest expense                                                                   (12,000)      

Profit before tax                                                                       47,000

Income tax                                                                               (26,700)

Net Income                                                                                 20,300

Net Income = $20,300