Question 1. Mary owns a shoe store. She just received a shipment of new fashion shoes. These shoes cost $45.00 a pair from the manufacturer. She wants to make a net profit of $20.00 on each pair. By selling them at $65.00 do you think she accomplishes her goal?
Question 2. You are the public manufacturer of the shoes sold to Mary. There was a small fire in the factory followed by a union strike. Can you show any of these items as a loss and must you still pay your shareholders a dividend?
Question 3. Where should the following expenses be listed?
- Product Warranty
- Social Security Cost Payable
- Medicare Tax Payable
- Employee Federal Income Tax Payable
- State Unemployment Tax Payable
- Federal Unemployment Tax Payable
- Wages
- Pension Plan Costs
Question 4. Calculate Operating Income and Net Income:
The following information is available from the accounting records of Manahan Co. for the year ended December 31, 2010.
Net cash provided by financing activities $112,000
Dividends paid $18,000
Extraordinary loss from flood, net of tax savings of $35,000 $105,000
Income tax expense $26,000
Other selling expenses $13,000
Net sales $644,000
Advertising Expense $45,000
Accounts receivable $62,000
Cost of goods sold $368,000
General and administrative expenses $143,000
A) Calculate the operating income for Manahan Co. for the year ended December 31, 2010.
B) Calculate the company’s net income for 2010.
Question 5. Calculate Operating Income and Net Income:
The following information is available from the accounting records of Spenser Co. for the year ended December 31, 2010.
Selling, general, and administrative expenses $51,000
Accounts payable $85,000
Extraordinary gain from lawsuit settlement, net of tax expenses of $28,000 $104,000
Research and development expenses $37,000
Loss from discontinued operations net of tax savings of $5,000 $16,000
Provision for income taxes $74,000
Net Sales $579,000
Interest expense $64,000
Net cash provided by operations $148,000
Cost of goods sold $272,000
A) Calculate the operating income for Spenser Co. for the year ended December 31, 2010.
B) Calculate the company’s net income for 2010.