Question

Use the balance sheets and information provided about revenue and expenses to answer the question.

Hopewell Corporation Balance Sheet As of December 31, 2019 (amounts in thousands)
Cash	125,000	Accounts Payable	24,000
Accounts Receivable	36,000	Debt	37,000
Inventory	52,000	Other Liabilities	30,000
Property Plant & Equipment, Gross	226,000	Total Liabilities	91,000
Accumulated Depreciation	59,000	Paid-In Capital	56,000
Property Plant & Equipment, Net	167,000	Retained Earnings	239,000
Other Assets	6,000	Total Equity	295,000
Total Assets	386,000	Total Liabilities & Equity	386,000

Hopewell Corporation Balance Sheet As of March 31, 2020 (amounts in thousands)
Cash	130,000	Accounts Payable	23,000
Accounts Receivable	32,000	Debt	39,000
Inventory	58,000	Other Liabilities	35,227
Property Plant & Equipment, Gross	226,000	Total Liabilities	97,227
Accumulated Depreciation	59,900	Paid-In Capital	56,000
Property Plant & Equipment, Net	166,100	Retained Earnings	239,873
Other Assets	7,000	Total Equity	295,873
Total Assets	393,100	Total Liabilities & Equity	393,100

Revenue and expenses information from January 1 to March 31, 2020 were:
Sales Revenue of $6,400,000
COGS of 40% of Sales
Interest of $130,000
Other Expenses of $600,000
SG&A of $640,000
Tax Rate of 38%

What is the net income in the first quarter of 2020?

Note: Revenue and expense amounts are provided in dollars but the financial statement units are thousands of dollars.

Please specify your answer in the same units as the financial statements (i.e., enter the number from your completed income statement).

Answer 1

Solution:

Below is the calculation for Net income in the first quarter of 2020