Question

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The adjusted trial balance of Norton Company contained the following information. Assume the tax rate is...

  1. The adjusted trial balance of Norton Company contained the following information. Assume the tax rate is 25%:

                                                                                                   Debit                      Credit

    Sales revenue                                                                                                     $390,000

    Sales returns and allowances                                               $  10,000

    Sales discounts                                                                           5,000

    Cost of goods sold                                                                 200,000

    Operating expenses                                                                110,000

    Interest revenue                                                                                                       8,000

    Interest expense                                                                         3,000

Compute Income before income tax

Compute the net income.

Compute the gross profit & rate(%)

Compute the net sales.

Compute income from Operations

Solutions

Expert Solution

Answer-

Solution:
Income Statement
Amount Amount
Revenues:
Service Revenue $            3,90,000
Less: Sales Return and allowance $               10,000
Less: Sales Discount $                  5,000
Net Sales Revenue $        3,75,000
Less: Cost of Goods Sold $        2,00,000
Gross Profit $        1,75,000
Less: Operating Expenses $        1,10,000
Operating Income $            65,000
Non-Operating income and expenses
Interest Revenue 8000
Interest Expenses -3000
5000
Net income before taxes $            70,000
Less: taxation ($ 70,000 X 25%) $            17,500
Net Income $            52,500
Answers =
Income from operation = Option B = $               65,000
Income before income tax = Option A = $               70,000
Net income = Option B = $               52,500
Gross Profit % = Gross Profit / Sales
Gross Profit % = $ 175,000 / $ 375,000 = 47%

Net sales 375000

ekkarill92 answered 1 year ago
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