Problem

Calculate income from operations and net income Selected information takenfrom the financi...

Calculate income from operations and net income Selected information taken

from the financial statements of Verbeke Co. for the year ended December 31, 2010,

follows:

Gross profit

$412,000

General and administrative expenses

 83,000

Net cash used by investing activities

106,000

Dividends paid

 51,000

Extraordinary loss from an earthquake, net of tax savings of $25,000  

 61,000

Net sales

 741,000

Advertising expense  

 76,000

Accounts payable  

 101,000

Income tax expense  

 83,000

Other selling expenses

 42,000

a. Calculate income from operations (operating income) for the year ended December 31, 2010. (Hint: You may wish to review Exhibit 2-2.)


b. Calculate net income for the year ended December 31, 2010.

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