INCOME STATEMENT PROBLEM: Radu is a global manufacturer of automotive parts. The
ID: 2589904 • 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:
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?
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
Prepare a statement of income
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
Sales 50000 Less: Cost of goods sold (33000) Gross profit 17000 Less: Bad debt expenses (100) Less: other operating expenses (500) Less: Selling and administrative exp (4700) Income from operation 11700 Interest Income and Other Non-operating Revenues 200 income before income tax 11900 Less: Income tax (3500) Net income 8400