Company prepared the following income statement for the year 2020:                   Sales                                                                  6,000,000                 Cost of goods sold                                           (2,800,000)                 Gross Income                                                    3,200,000                 Gain on sale of equipment                                100,000                 Total Income                                                      3,300,000                 Operating expenses                                           (500,000)                 Casualty loss                                                       (300,000)                 Income before tax                                              2,500,000                 Income tax- 30%                                                    750,000                 Net Income                                                         1,750,000                 Third quarter sales were 30% of total sales For interim reporting purposes, a gross profit rate of 40% can be justified Variable operating expenses are allocated in the same proportion as sales Fixed operating expenses are all allocated based on the expiration of time Of the total operating expenses, P400,000 relate to variable expenses and P100,000 relate to fixed expenses The equipment was sold on June 1 The casualty loss occurred on September 1 What amount should be reported as income before tax for the third quarter ended September 30?

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 52E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...
icon
Related questions
Question

Company prepared the following income statement for the year 2020:

 

                Sales                                                                  6,000,000

                Cost of goods sold                                           (2,800,000)

                Gross Income                                                    3,200,000

                Gain on sale of equipment                                100,000

                Total Income                                                      3,300,000

                Operating expenses                                           (500,000)

                Casualty loss                                                       (300,000)

                Income before tax                                              2,500,000

                Income tax- 30%                                                    750,000

                Net Income                                                         1,750,000

               

  • Third quarter sales were 30% of total sales
  • For interim reporting purposes, a gross profit rate of 40% can be justified
  • Variable operating expenses are allocated in the same proportion as sales
  • Fixed operating expenses are all allocated based on the expiration of time
  • Of the total operating expenses, P400,000 relate to variable expenses and P100,000 relate to fixed expenses
  • The equipment was sold on June 1
  • The casualty loss occurred on September 1

What amount should be reported as income before tax for the third quarter ended September 30?       

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Ratio Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Corporate Fin Focused Approach
Corporate Fin Focused Approach
Finance
ISBN:
9781285660516
Author:
EHRHARDT
Publisher:
Cengage
Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning