Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 93

Calculate operating income and net income The following information is available from the accounting records of Spenser Co. for the year ended December 31, 2010:

Selling, general, and administrative expenses	$ 51,000
Accounts payable	85,000
Extraordinary gain from lawsuit settlement, net of tax expense of $28,000	104,000
Research and development expenses	37,000
Loss from discontinued operations net of tax savings of $5,000 . .	16,000
Provision for income taxes	74,000
Net sales	579,000
Interest expense	64,000
Net cash provided by operations	148,000
Cost of goods sold	272,000

Required:

a. Calculate the operating income for Spenser Co. for the year ended December 31, 2010.

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b. Calculate the company’s net income for 2010.

Step 1 of 2

Calculate operating income net income

a) The computation of operating income of Spenser Co. with provided accounting records for the year ended December 31, 2010 is as follows: