Question

Radu is a global manufacturer of automotive parts. The annual reporting period ends Dec. 31. Below find balances for all of its income statement accounts in alphabetical order. All accounts have usual normal balances in USD. Bad Debt Expense* 100 Cost of Goods Sold     33,000 Income Tax Expense   3,500 Interest Income and Other Non-operating Revenues 200 Other Operating Expenses 500 Sales Revenue 50,000 Selling and Administrative Expense       4,700Prepare a statement of income and determine the following:a. What is the dollar amount of the gross profit?b. What is the dollar amount of the income from operations?c. What is the dollar amount of the income before income tax?d. What is the dollar amount of the net income?

Answer 1

Answer:

a) dollar amount of the gross profit = 17000

b) dollar amount of the income from operations = 11700

c) dollar amount of the income before income tax = 11900

d) dollar amount of the net income = 8400

Explanation:

(a) Gross profit:

= Sales - Cost of goods sold

= 50,000 - 33,000

= $17,000

(b) Income from operation:

= Gross profit - Bad debt expenses - other operating expenses - Selling and administrative expenses

= $17,000 - $100 - $500 - $4,700

= $11,700

(c) Income before income tax:

= Income from operation + Interest Income and Other Non-operating Revenues

= $11,700 + $200

= $11,900

(d) Net income:

= Income before income tax - Income tax

= $11,900 - $3,500

= $8,400