Question

1. The following information is available from the accounting records of Geneva Co. for the year ended June 30, 2018:

Accounts payable Cost of goods sold Interest expense Net cash provided by operations Net sales Provision for income taxes Research and development expenses Selling, general, and administrative expenses 90,000 270,000 60,000 150,000 490,000 20,000 40,000 50,000

1. Calculate the operating income for Geneva Co. for the year ended June 30, 2018. Show all of your work.

2. Calculate the company’s net income for fiscal year 2018.

Answer 1

Ans. 1	Particulars	Amount	Amount
	Net Sales		$490,000
	Less: Cost of goods sold		$270,000
	Gross profit		$220,000
	Less: Operating expenses:
	Selling, general and administrative expense	$50,000
	Research and development expense	$40,000
	Total Operating Expenses		$90,000
	Operating income (EBIT)		$130,000
Ans. 2	Particulars	Amount	Amount
	Operating income (EBIT)		$130,000
	Less: Interest expenses		-$60,000
	Income before tax		$70,000
	Less: Provision for income taxes		-$20,000
	Net income		$50,000