INCOME STATEMENT PROBLEM: Radu is a global manufacturer of automotive parts. The
ID: 2464705 • Letter: I
Question
INCOME STATEMENT PROBLEM: 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
4,700
* Operating Expense
Prepare a statement of income and determine the following:
Q37. What is the dollar amount of the gross profit?
A. $ 17,000 B. $ 33,000 C. ($33,000) D. $50,000
Q38. What is the dollar amount of the income from operations?
A. $ 11,200 B. $ 11,700 C. $11,800 D. $11,900
Q39. What is the dollar amount of the income before income tax?
A. $ 11,500 B. $ 11,700 C. $11,800 D. $11,900
Q40. What is the dollar amount of the net income?
A. $ 8,000 B. $ 8,400 C. $9,500 D. $15,400
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
4,700
Explanation / Answer
The income statement is as follows.
So:
(Q37) (A)
(Q38) (B)
(Q39) (D)
(Q40) (B)
INCOME STATEMENT $ Sales revenue 50,000 Less: Cost of Goods Sold 33,000 Equals: Gross profit 17,000 LesS: Bad Debt Expense 100 Less: Other Operating Expense 500 Less: Selling & Administrative Expense 4,700 Equals: Income from Operations 11,700 Add: Interest Income & Other non-operating Revenues 200 Equals: Income before tax 11,900 Less: Income tax 3,500 Equals: Net income 8,400