Question 3 The adjusted trial balance of Norton Company contained the following information. Assume the tax...
Question 3
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The adjusted trial balance of Norton Company contained the following information. Assume the tax rate is 25%:
Debit Credit
Sales revenue $390,000
Sales returns and allowances $ 10,000
Sales discounts 5,000
Cost of goods sold 200,000
Operating expenses 110,000
Interest revenue 8,000
Interest expense 3,000
Compute income from operations.
A 175000
B 65000
C 50000
D 70000
Compute Income before income tax
A 70000
B 52500
C 65000
D 73000
Compute the net income.
A 70000
B 52500
C 175000
D 65000
Compute the gross profit. rate(%)
A 25%
B 4%
C 75%
D 10%
Homework Answers
| Solution: | ||||
| Income Statement | ||||
| Amount | Amount | |||
| Revenues: | ||||
| Service Revenue | $ 3,90,000 | |||
| Less: Sales Return and allowance | $ 10,000 | |||
| Less: Sales Discount | $ 5,000 | |||
| Net Sales Revenue | $ 3,75,000 | |||
| Less: Cost of Goods Sold | $ 2,00,000 | |||
| Gross Profit | $ 1,75,000 | |||
| Less: Operating Expenses | $ 1,10,000 | |||
| Operating Income | $ 65,000 | |||
| Non-Operating income and expenses | ||||
| Interest Revenue | 8000 | |||
| Interest Expenses | -3000 | |||
| 5000 | ||||
| Net income before taxes | $ 70,000 | |||
| Less: taxation ($ 70,000 X 25%) | $ 17,500 | |||
| Net Income | $ 52,500 | |||
| Answers = | ||||
| Income from operation = Option B = | $ 65,000 | |||
| Income before income tax = Option A = | $ 70,000 | |||
| Net income = Option B = | $ 52,500 | |||
| Gross Profit % = Gross Profit / Sales | ||||
| Gross Profit % = $ 175,000 / $ 375,000 = | 47% | |||
Add Answer to:
Question 3
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Accounts receivable
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Inventory
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Supplies
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Land
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Buildings
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Accounts receivable
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Prepaid insurance
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Inventory
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Supplies
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Buildings
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