During 2012, Raines Umbrella Corp. had sales of $630,000. Cost of goods sold, ad
ID: 2720610 • Letter: D
Question
During 2012, Raines Umbrella Corp. had sales of $630,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $470,000, $95,000, and $140,000, respectively. In addition, the company had an interest expense of $70,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)
a. What is Raines’s net income for 2012? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.)
b. What is its operating cash flow? (Do not round intermediate calculations.)
Explanation / Answer
-75,000
-145,000
-145,000
65,000
Particulars Amount Sales 630,000 Less: Cost of Goods Sold -470,000 Less: Admn, and Selling Exp. -95,000 Less: Depreciation Exp. -140,000 Profit before Interest and Taxes-75,000
Less: Interest -70,000 Profit before tax-145,000
Less: Tax --- Profit after Tax (Net Profit)-145,000
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