250 points Selected information taken from the financial sta

2.50 points Selected information taken from the financial statements of Verbeke Co. for the year ended December 31, 2016, follows Gross proft General and administrative expenses Net cash used by investing activities Dividends paid Interest expense Net sales 414,000 80,000 107,000 55,000 64,000 746,000 74,000 105,000 83,000 45,000 expense Accounts payable Income tax expense Other selling expenses 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. Income from operation $       1,32,000 Working: Gross Profit $       4,14,000 Less: General and administration expenses               80,000 Advertsing expenses               74,000 Other selling expenses               45,000 Earning before interest and taxes(EBIT) $       2,15,000 Less:Tax expenses               83,000 Income from operation $       1,32,000 b. Net Income $           68,000 Working: Earning before interest and taxes(EBIT) $       2,15,000 Less: Interest expenses               64,000 Income tax expenses               83,000 Net Income               68,000