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	$	45,900
Accounts payable		76,500
Research and development expenses		33,300
Loss from discontinued operations, net of tax savings of $4,500		14,400
Provision for income taxes		66,600
Net sales		521,100
Interest expense		57,600
Net cash provided by operations		133,200
Cost of goods sold		244,800

a. Calculate the operating income for Spenser Co. for the year ended December 31, 2019.

b. Calculate the company's net income for 2019.

Answer 1

Solution:

Spenser co
Operating Income statement
For the year ended december 31,2019
Net sales		5,21,100
Less: Cost of goods sold		2,44,800
Gross profit		2,76,300
Less: Expenses
Selling and administration expenses	45,900
Research and development expenses	33,300
Total expenses		79,200
Operating income		1,97,100

Spenser co
Net Income statement
For 2019
Operating Income before interest	1,97,100
Less: Interest expense	57,600
Income before taxes	1,39,500
Less: Provision for income taxes	66,600
Income from continuous operations	72,900
Less: Loss from discontinued operaions	14,400
Net Income	58,500