Question

Santos Corporation gathered the following information for the fiscal year ended December 31, 2020: Sales $1,500,000 Operating expenses 160,000 Cost of goods sold 960,000 Loss on disposal of equipment 40,000 Santos Corporation is subject to a 30% income tax rate. Prepare a partial income statement, beginning with income from operations.

Answer 1

Answer:

Income from operations    380,000

Loss on sale of equipment  40,000

Pretax income                    340,000

Tax at 30%                          102,000

Net Income                         238,000

Explanation:

1          Santos Corporation

         Income statement

For the year ended December 31, 2020

Sales................................ $1,500,000

less: Cost of goods sold $960,000

Gross Profit                      $540,000

Less: Operating expenses 160,000

Income from operations    380,000

2          Santos Corporation

             Income statement

For the year ended December 31, 2020

Income from operations    380,000

Loss on sale of equipment  40,000

Pretax income                    340,000

Tax at 30%                          102,000

Net Income                         238,000