Question

The following information is available from the accounting records of Spenser Co. for the year ended December 31, 2019: Selling, general, and administrative expenses $ 106,000 Accounts payable 170,000 Research and development expenses 77,000 Loss from discontinued operations, net of tax savings of $8,000 24,000 Provision for income taxes 35,000 Net sales 948,000 Interest expense 97,000 Net cash provided by operations 296,000 Cost of goods sold 521,000 Required: a. Calculate the operating income for Spenser Co. for the year ended December 31, 2019.

Answer 1

A. Operating income $244,000

B Net income $88,000

Step-by-step explanation:

Spenser Co.

Operating Income Statement

For the year ended December 31, 2019

Net sales 948000

Cost of goods sold (521000)

Gross profit 427000

Expenses:

Selling, general, and administrative expenses (106000)

Research and development expense (77000)

(183000)

Operating income( 427000 -183000) 244000

b

Operating income 244000

Interest expense (97000)

Income from continuing operations before taxes 147000

Provision for income taxes (35000)

Income from continuing operations 112000

Loss from discontinued operations, net of tax savings of $8,000 (24000)

Net income for 2019 88,000