Selected information taken from the financial statements of

Selected information taken from the financial statements of Fordstar Co. for the year ended December 31, 2016, follows: Net cash provided by operations Cost of goods sold Selling, general, and administrative expenses Accounts payable Dividends paid Research and development expenses Merchandise inventory Provision for income taxes Net sales Interest expense $39,000 170,300 58,500 46,800 81,900 35,100 57,200 22,100 477,100 53,300 Required: a. Calculate income from operations (operating income) for the year ended December 31, 2016. b. Calculate net income for the year ended December 31, 2016.

Solution

a Net sales 477100 Cost of goods sold -170300 Gross profit 306800 General and administrative expenses -58500 Research and development expenses -35100 Income from operations (operating income) 213200 b Income from operations (operating income) 213200 Interest expense -53300 Income before taxes 159900 Income tax expense -22100 Net income 137800