Problem 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?
Problem 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?
Problem 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
Problem 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.
Problem 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.