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    Spenser Co: Operating and Net Income

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    Calculate operating income and net income: the following information is available from the accounting records of Spenser Co. for the year ended December 31, 2004:

    Selling, general and administrative expenses $51,000
    Accounts payable 85,000
    Extraordinary gain from lawsuit, net of tax expense of $28,000 104,000
    Research and development expenses 37,000
    Loss from discounted operations net of tax savings of $5,000 16,000
    Provisions for income taxes 74,000
    Net sales 579,000
    Interest expense 64,000
    Net cash provided by operations 148,000
    Cost of goods sold 272,000

    a. Calculate the operating income for Spenser Co. for the year ended December 31, 2004.
    b. Calculate the company's net income for 2004.

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    Solution Preview

    Net sales 579,000
    Cost of goods sold (272,000)
    Gross Profit 307,000
    Selling, G&A exp (51,000)
    R&D expenses (37,000)
    Operating Income 219,000

    Operating Income ...

    Solution Summary

    The operating income and net income is calculated.