Answer:
a. Income from operation is $208,000
b. Net income is $66,000
Explanation:
a. The computation of the income from operation is shown below:
= Gross profit - operating expenses
where,
Gross profit is $411,000
And, the operating expenses = General and administrative expenses + Advertising expense + Other selling expenses
= $84,000 + $76,000 + $43,000
= $203,000
Now put these values to the above formula
So, the answer would be equal to
= $411,000 - $203,000
= $208,000
b. Now the net income would equal to
= Earning before interest and taxes - income tax expense
where,
Earning before interest and taxes = Income from operations - interest expense
= $208,000 - $62,000
= $146,000
And, the income tax expense is $80,000
Now put these values to the above formula
So, the answer would be equal to
= $146,000 - $80,000
= $66,000
