Question

Tuduling research and development expenditures. 3. For Mortenson Company, the following information is available: Cost of goods sold $390,000 Dividend revenue 15,000 Income tax expense 36,000 Operating expenses 138,000 Sales revenue 600,000 In Mortenson's multiple-step income statement, gross profit should be reported as a. should not be reported. b. should be reported at $51,000. c. should be reported at $210,000 d. should be reported at $225,000 4. At Ruth Company, events and transactions during 2017 included the following. The tax rate for all items is 30%. (1) Depreciation for 2015 was found to be understated by $120,000. (2) A strike by the employees of a supplier resulted in a loss of $100,000 (3) The inventory at December 31, 2015, was overstated by $160,000 (4) A disposal of a component of the business resulted in a $2,000,000 loss. The effect of these events and transactions on 2017 net income net of tax would be a. ($70,500) b. ($1,470,000) c. ($1,554,000). d. ($1,666,000).

Answer 1

Answer :-

3. Gross Profit = Sales Revenue- Cost of goods sold

Gross Profit = $600,000 - $390,000

Gross Profit = $210,000

So, In Mortenson's multiple-step income statement, gross profit should be reported at $210,000.

So the correct answer is option C. ( $210,000)