Question

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31:

	Rails    Division	Locomotive    Division	Corporate    Total
Cost of goods sold	$45,100	$31,000
Direct operating expenses	26,300	22,100
Sales	95,400	66,000
Interest expense			$2,600
General overhead			19,100
Income tax			4,100

The net income for Train Corporation is

a.$72,200

b.$11,100

c.$36,900

d.$85,300

Answer 1

Answer

• Correct Answer = Option ‘B’ $ 11,100

Sales		$161,400
Cost of Goods Sold		$76,100
Gross Profits		$85,300
Direct operating expenses	$48,400
General Overhead	$19,100
Interest expense	$2,600
Income tax	$4,100
Total expenses		$74,200
Net Income		$11,100

--Working

Sales		=95400+66000
Cost of Goods Sold		=45100+31000
Gross Profits		=161400-76100
Direct operating expenses	=26300+22100
General Overhead	19100
Interest expense	2600
Income tax	4100
Total expenses		=48400+19100+2600+4100
Net Income		=85300-74200