Chapter 2, Problem 11P

Stein Books Inc. sold 1,900 finance textbooks for $\text{\$250}$ each to High Tuition University in 20X1. These books cost $\text{\$210}$ to produce. Stein Books spent $\text{\$12,200}$ (selling expense) to convince the university to buy its books.

Depreciation expense for the year was $\text{\$15,200}$ . In addition, Stein Books borrowed $\text{\$104,000}$ on January 1, 20X1, on which the company paid 12 percent interest. Both the interest and principal of the loan were paid on December 31, 20X1. The publishing firm’s tax rate is 30 percent.

Did Stein Books make a profit in 20X1? Please verify with an income statement