Question

The following is a partial year-end adjusted trial balance. Account Title Debits Credits Sales revenue 300,000 Loss on sale of investments 22,000 Interest revenue 4,000 Cost of goods sold 160,000 General and administrative expenses 40,000 Restructuring costs 50,000 Selling expenses 25,000 Income tax expense 0 Income tax expense has not yet been recorded. The income tax rate is 40%. a. Determine the operating income (loss). b. Determine the income (loss) before income taxes. c. Determine the net income (loss).

Answer 1

Answer:

Operating income    75,000

EBT                            57,000

Net income ncome  34,200

Explanation:

Sales revenue       300,000

Cost of goods sold (160,000)

G&A expenses         (40,000)

Selling expenses     (25,000)  

Operating income    75,000

loss on sale              (22,000)

interest revenue          4,000

EBT                            57,000

income tax expense

57,000 x 40% =        (22,800)

Net income ncome  34,200