Question

Calculate operating income and net income Selling, general, and administrative expenses were $66,000; net sales were $300,000; interest expense was 7,100; research and development expenses were $31500; net cash provided by operating activities was $79200; net income was $16800; income tax expense was $7600; cost of goods sold was $165,000.

Required:
a. Calculate operating income for the period.
b. Calculate net income for the period.

Answer 1

Operating Income for the period = $37500

Net Income = $22800

Step-by-step explanation:

Particulars Amount

Net Sales $300,000

Less: Cost of Goods Sold $165,000

Gross Profit $135,000

Less: Selling Expenses $66,000

Less: Research expenses $31,500

Operating Income $37,500

Less: Interest Expense $7,100

Earnings before Tax $30,400

Less: Taxes $7,600

Net Income $22,800

Answer 2

a. $37,500

b. $22,800

Step-by-step explanation:

The computation is shown below:

a. For operating income

Net Sales $300,000

Less: Cost of Goods Sold -$165,000

Gross Profit $135,000

Less: Selling, general and administrative Expenses $66,000

Less: Research and development expenses $31,500

Operating Income (EBIT) $37,500

b. For the net income

Operating Income (EBIT) $37,500

Less: Interest Expense -$7,100

Earnings before Tax (EBT) $30,400

Less: Taxes $7,600

Earnings after Tax or Net Income $22,800

We simply applied the above equation or format for determining the operating income and net income