During the year, Belyk Paving Co. had sales of $2,393,000. Cost of goods sold, a

Question

During the year, Belyk Paving Co. had sales of $2,393,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,432,000, $435,700, and $490,700, respectively. In addition, the company had an interest expense of $215,700 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

a. What is the company’s net income? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Net income            $

b. What is it's operating cash flow? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Operating cash flow            $

Explanation / Answer

Solution :

            Statement showing calculation of Operating cash flow and EAT Sl.No.      Particulars                 Amount 1 Sales $                     23,93,000.00 2 Less: Cost of good sold $                    -14,32,000.00 3 Less : Administrative and selling expenses $                      -4,35,700.00 4 Operating cash flow $                        5,25,300.00 5 Less: Depreciation $                      -4,90,700.00 6 EBIT (Earnings before Interest and tax) $                          34,600.00 7 Less: Interest $                      -2,15,700.00 8 EBT (Earnings before tax_ $                      -1,81,100.00 9 Less : Tax @ 35 % ( - 181100 * 0.35 ) $                          -63,385.00 10 Earnings after tax (EAT) or Net Income $                      -1,17,715.00

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