Stein Books Inc. sold 2,200 finance textbooks for $250 each to High Tuition Univ

ID: 2449456 • Letter: S

Question

Stein Books Inc. sold 2,200 finance textbooks for $250 each to High Tuition University in 2013. These books cost $200 to produce. Stein Books spent $12,900 (selling expense) to convince the university to buy its books. Depreciation expense for the year was $15,900. In addition, Stein Books borrowed $105,000 on January 1, 2013, on which the company paid 13 percent interest. Both the interest and principal of the loan were paid on December 31, 2013. The publishing firm’s tax rate is 30 percent. Prepare an income statement for Stein Books. (Input all amounts as positive values.) Stein Books Inc. Income Statement For the Year Ending December 31, 2013 $ $ $ $ $

Explanation / Answer

Stein Books Inc.

Income Statement

For the Year Ending December 31, 2013

Sales (2200*250)

$ 550,000

Less: Cost of Goods sold (2200*200)

$ (440,000)

Gross Profits

$ 110,000

Less: Selling and administrative expenses:

Less: Selling Expenses

$ (12,900)

Less: Depreciation expense

$ (15,900)

Less: Interest Expense (105000*13%)

$ (13,650)

Profits Before tax

$ 67,550

Less: Tax = 67550*30%

$ (20,265)

Net income

$ 47,285