PROBLEM
1.Information about Space Travel Corporation, which sells rocket engines, is shown below:
Common shares outstanding150,000
Advertising expense$ 9,000
Cost of goods sold330,000
Depreciation expense13,500
Income tax expense15,000
Income tax payable7,500
Interest expense6,000
Payments to owners4,500
Retained earnings37,500
Salaries expense45,000
Sales revenue450,000
Required:
Compute (a) gross profit, (b) income from operations, (c) net income and (d) earnings per share for the period.
2.Sandovar Company reported the following income statement for June 2007:
Sandovar Company
Income Statement
For the Month Ended June 30, 2007
Sales$736,000
Cost of sales552,000
$184,000
Selling expense88,000
General and administrative expense54,000
Other income and expense, net(22,000)
120,000
Income before income taxes64,000
Provision for income tax20,000
$ 44,000
$4.40
Required:
Determine (a) gross profit, (b) product cost expensed during year, (c) non-product operating expenses, (d) operating income, (e) net income and (f) earnings per share.