Calculate income statement amounts for Tiger Company
Not what you're looking for?
Presented below is information related to Tiger Company
Retained earnings 12/31/06 650,000
Sales 1,600,000
Selling and admin expenses 240,000
hurricane loss (pre-tax) on plant (extraordinary item) 250,000
cash dividends declared on common stock 33,600
Cost of goods sold 1,000,000
Gain resulting from computation error on depreciation charge in 2005 (pre-tax) 520,000
Other revenue 60,000
other expenses 50,000
Instructions:
Complete the items below for the year 2007. Assume a 30% tax rate and that 100,000 shares of common stock were outstanding during the year.
gross profit
income from operations
income taxes
extraordinary items
net income
Purchase this Solution
Solution Summary
Income Statement for Tiger Company: Calculate amounts for gross profit, income from operations, income tax, extraordinary items and net income. The solution shows all the amounts to arrive at the solution including explanations as required.
Solution Preview
Gross profit is defined as sales minus cost of goods sold: 1,600,000 - 1,000,000 = 600,000
Income from operations is defined as revenue minus operating expenses: 1,600,000 - (240,000 + 1,000,000) = 360,000
Income tax is computed on "Income before taxes and extraordinary items": (360,000 + 60,000 - 50,000) x 30% = 111,000
Extraordinary item is reported as 250,000 less applicable income tax savings: 250,000 - 30% = 175,000
Net income is 360,000 + 60,000 - 50,000 - 111,000 - 175,000 = 84,000
Note 1: Extraordinary items are ...
Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Basics of corporate finance
These questions will test you on your knowledge of finance.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.