Question

The Forecast and Budget Department of XYZ Corporation (involved in the retail trade business) has developed the following selected financial information for the year 2019: $ · Gross receipts 25,800,000 · Cost of goods sold 21,300,000 · Dividends received (less than 20%-owned) 150,000 · Interest Income 50,000 · Interest Expense 850,000 · Depreciation 575,000 · Other Operating Expenses 1,500,000 XYX is planning a major expansion project for the year 2020 and is in the process securing the needed financing. Financial approval is dependent upon the company averaging Net Income of at least $750,000 for the last three years. Net income for 2017 and 2018 was $875,000 and $925,000 respectively. Your boss the Vice President of Financial Operations has asked you to use the numbers above and calculate Net Income for 2019 to see if it meets or exceeds the target of $750,000.

Answer 1

year	2019
Gross receipts (A)	2,58,00,000
Cost of goods sold (B)	2,13,00,000
gross income (A)-(b)	45,00,000
Oher income
Dividends recd©	1,50,000
Interets income(d)	50,000
Add: ©(d)	2,00,000
Gross Total Income	47,00,000
Interest expense	8,50,000
dep	5,75,000
Other ope exp	15,00,000
Expenses	17,75,000
Tax @21%	3,72,750
Balance Income	14,02,250
	2019	2018	2017
Net Income	14,02,250	875000	925000
Avg Net Income	10,67,417
Required income	7,50,000
Therefore it exceeds the target