Question

Use the balance sheets and information provided about revenue and expenses to answer the question. Nippon Technology Balance Sheet As of December 31, 2017 (amounts in thousands) Cash 137,000 Accounts Payable 20,000 Accounts Receivable 32,000 Debt 36,000 Inventory 51,000 Other Liabilities 9,000 Property Plant & Equipment, Gross 227,000 Total Liabilities 65,000 Accumulated Depreciation 73,000 Paid-In Capital 72,000 Property Plant & Equipment, Net 154,000 Retained Earnings 245,000 Other Assets 8,000 Total Equity 317,000 Total Assets 382,000 Total Liabilities & Equity 382,000 Nippon Technology Balance Sheet As of March 31, 2018 (amounts in thousands) Cash 140,000 Accounts Payable 28,000 Accounts Receivable 26,000 Debt 32,000 Inventory 56,000 Other Liabilities 8,670 Property Plant & Equipment, Gross 227,000 Total Liabilities 68,670 Accumulated Depreciation 73,800 Paid-In Capital 72,000 Property Plant & Equipment, Net 153,200 Retained Earnings 246,530 Other Assets 12,000 Total Equity 318,530 Total Assets 387,200 Total Liabilities & Equity 387,200 Revenue and expenses information from January 1 to March 31, 2018 were: Sales Revenue of $7,900,000 COGS of 40% of Sales Interest of $80,000 Other Expenses of $600,000 SG&A of $790,000 Tax Rate of 34% What is the net income in the first quarter of 2018? Please specify your answer in the same units as the balance sheets and round your answer to the nearest integer.

Answer 1

Answer: $2,158

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Computation of Net Income for the 1st quarter
Sales Revenue	$7,900,000
Less: Cost of Goods Sold      [Sales x40% = $7,900,000 x 40%]	$3,160,000
Gross Profit	$4,740,000
Less: Interest	$80,000
Less: Other Expenses	$600,000
Less: Selling, General & Administrative Expenses (SG&A)	$790,000
Income Before Income Tax	$3,270,000
Less: Income tax            [$3,270,000 x 34%]	$1,111,800
Net Income	$2,158,200

In thousands = $2,158,200 / 1,000 = $2,158.2 = $2,158 (rounded to nearest integer)