Exercise 5-17 Income Statement Relations Compute the missing amounts for Year 9
ID: 2818943 • Letter: E
Question
Exercise 5-17
Income Statement Relations
Compute the missing amounts for Year 9 and Year 10.
Novo Limited
Income Statement
For the Years Ended March 31
Year 10
Year 9
Sales
$ 16,351,503
$ 13,978,309
Cost of Goods Sold
13,901,523
12,091,433
Gross Profit
Correct 13
Correct 14
Selling and Administrative Expense
1,103,713
1,033,296
Advertising Expense
595,902
488,150
Research and Development Expense
229,759
196,225
Other Income (Expense)
Correct 25
18,130
Profit Before Taxes
Correct 28
Correct 29
Income Tax Expense
47,613
26,197
Net Income
$ 484,708
Correct 35
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HideCompute the missing amounts for Year 9 and Year 10.
Novo Limited
Income Statement
For the Years Ended March 31
Year 10
Year 9
Sales
$ 16,351,503
$ 13,978,309
Cost of Goods Sold
13,901,523
12,091,433
Gross Profit
$Correct 13
$Correct 14
Selling and Administrative Expense
1,103,713
1,033,296
Advertising Expense
595,902
488,150
Research and Development Expense
229,759
196,225
Other Income (Expense)
Correct 25
18,130
Profit Before Taxes
$Correct 28
$Correct 29
Income Tax Expense
47,613
26,197
Net Income
$ 484,708
$Correct 35
Explanation / Answer
You made error a calculation error.
Profit before taxes = Gross Profit - Selling and Administrative Expense - Advertising expense - Research and Development expense + Other income
or, Profit before taxes = 1,886,876 - 1,033,296 - 488,150 - 196,225 + 18,130 = 187,335
Net Income = Profit before taxes - income tax expense = 187,335 - 26,197 = 161,138
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