During 2010, Raines Umbrella Corp. had sales of $910,000. Cost of goods sold, ad
ID: 2738722 • Letter: D
Question
During 2010, Raines Umbrella Corp. had sales of $910,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $648,000, $125,000, and $170,000, respectively. In addition, the company had an interest expense of $59,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)
During 2010, Raines Umbrella Corp. had sales of $910,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $648,000, $125,000, and $170,000, respectively. In addition, the company had an interest expense of $59,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)
Explanation / Answer
Answer
Answer (a)
Net income statement (Raines Umbrella Corp -2010)
Figures in $
Particulars
Amount
Sales
a
9,10,000
Cost of goods sold
b
-6,48,000
administrative and selling expenses
c
-1,25,000
depreciation expenses
d
-1,70,000
interest expense
e
-59,000
Net Income before tax (a+b+c+d+e)
f
-92,000
Tax (35% on profits)
g
0
Net income after tax (f-g)
-92,000
Answer (b)
Operating cash flow statement (Raines Umbrella Corp -2010)
Figures in $
Particulars
Amount
Net income after tax
a
-92000
As calculated in Answer (a)
depreciation expenses
b
1,70,000
Operating cash flows (a+b)
78,000
Net income statement (Raines Umbrella Corp -2010)
Figures in $
Particulars
Amount
Sales
a
9,10,000
Cost of goods sold
b
-6,48,000
administrative and selling expenses
c
-1,25,000
depreciation expenses
d
-1,70,000
interest expense
e
-59,000
Net Income before tax (a+b+c+d+e)
f
-92,000
Tax (35% on profits)
g
0
Net income after tax (f-g)
-92,000
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