During the year, Belyk Paving Co. had sales of $2,396,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,429,000, $435,400, and $490,400, respectively. In addition, the company had an interest expense of $215,400 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) a. What is the company's net income? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e. g., 32.) b. What is it's operating cash flow?

Question

Jessie Williams

Business

20 October, 15:00

During the year, Belyk Paving Co. had sales of $2,396,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,429,000, $435,400, and $490,400, respectively. In addition, the company had an interest expense of $215,400 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) a. What is the company's net income? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e. g., 32.) b. What is it's operating cash flow?

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Answers (1)

Know the Answer?

Tripod · Answer 1

a) $-174,200 b) $531,600

Explanation:

This information can only be correctly disclosed through an income statement as shown below.

Belyk Paving Co

Income Statement

For the period---

$

Sales 2,396,000

Less: Cost of Goods Sold 1,429,000

Gross Margin 967,000

Less expenses:

Depreciation (490,400)

Selling and administrative expenses (435,400)

EBIT 41,200

Less: Interest Expenses (215,400)

EBT (174,200)

Less: 30% tax 0 - - (Note 1)

Net loss (174,200)

a) Net Loss $ 174,200

b) Operating Cash Flow = EBIT - Taxes + Depreciation

= 41,200 - 0 + 490,400

= $531,600

Note 1: No tax is paid when EBT is negative