Answer:
What is the amount of gross profit to be reported on ABC Company’s 12/31/X1 income statement?
Gross Profit = Sales Revenue - Cost of Goods Sold
= $54,200 - 15,100
= $39,100
What is the amount of operating income (EBIT) to be reported on ABC Company’s 12/31/X1 income statement?
EBIT = Sales Revenue - Cost of Goods Sold - Operating Expenses
We have the following operating expenses:
Salaries expense $7,100
Rent expense = $4,900
Supplies expense = $1,300
Utilities expense = $4,800
Depreciation expense = $2,500
Total operating expenses = $20,600
Now we substract this figure from the gross profit we found above
EBIT = $39,100 - 20,600
= $18,500
What is the amount of earnings before taxes (EBT) to be reported on ABC Company’s 12/31/X1 income statement?
EBT = Sales Revenues + Interest Revenue - Cost of Goods Sold - Operating Expenses - Non-Operating Expenses.
EBT = $54,200 + $1,400 - $15,100 - $20,600 - $2,100
= $17,800
What is the amount of net income to be reported on ABC Company’s 12/31/X1 income statement?
Net Income = Sales Revenues + Interest Revenue - Cost of Goods Sold - Operating Expenses - Non-Operating Expenses - Tax Expense
We simply substract the Tax Expense ($3,700), from the EBT.
Net Income = $17,800 - $3,700
= $14,100
