Presented below is information related to Tiger Company
Retained earnings 12/31/06 650,000
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
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.
income from operations
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 ...
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.