Colby Corporation has provided the following information: • Operating revenues from customers were $199,700.
• Operating expenses for the store were $111,000.
• Interest expense was $9,200.
• Gain from sale of plant and equipment was $3,300.
• Dividend payments to Colby's stockholders were $7,700.
• Income tax expense was $36,000.
• Prepaid rent was $5,000.
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How much was Colby's net income?
A)$46,800.
B)$39,100.
C)$48,300.
D)$52,700.

Question

Quizplus · Accepted Answer

Net income is calculated by taking the operating revenues and subtracting operating expenses, interest expense, and income tax expense, then adding the gain from the sale of plant and equipment. The calculation is as follows: $199,700 (operating revenues) - $111,000 (operating expenses) - $9,200 (interest expense) - $36,000 (income tax expense) + $3,300 (gain from sale) = $46,800. Dividend payments and prepaid rent are not included in the calculation of net income.

Colby Corporation Has Provided the Following Information: • Operating Revenues