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Gable Inc. provided you with the following information at December 31, 2016: Net sales $ 560,000...

Question:

Gable Inc. provided you with the following information at December 31, 2016:

Net sales $ 560,000
Cost of goods sold 370,000
Operating expenses 100,000
Dividend revenue 10,000
Realized gains from sale of trading securities 12,000
Realized gains from sale of available for sale securities 8,000
Unrealized losses from trading securities 15,000
Unrealized gains from available for sale securities 20,000
Reclassification adjustment 8,000
Income tax expense 30,000

1. What is Gable's net income for 2016 (assume there are no income tax effects related to items reported in other comprehensive income)?

A) $75,000.

B) $90,000.

C) $67,000.

D) $63,000.

E) $87,000

2. What is Gable's other comprehensive income (loss) for 2016?

A) $20,000.

B) $(8,000).

C) $28,000.

D) $12,000.

3. What is Gable's comprehensive income for 2016?

A) $95,000.

B) $87,000.

C) $75,000.

D) $90,000.

E) $99,000.

What Is Net Income:

A company's Net Income is presented as a subtotal to Comprehensive income in the Statement of Operations. Net Income reflects the money leftover from sales after deducting the cost of goods sold, operating expenses, interest and income tax.

Answer and Explanation:

1.

See below.

Net sales $ 560,000
Cost of goods sold 370,000
Operating expenses 100,000
Dividend revenue 10,000
Realized gains from sale of trading securities 12,000
Realized gains from sale of available for sale securities 8,000
Unrealized losses from trading securities 15,000
Income tax expense 30,000
Net income = 560-370-100+10+12+8-30-15 $75,000

The answer is A.

2.

Unrealized gains from available for sale securities 20,000
Reclassification adjustment 8,000
Other comprehensive income =20-8 $12,000

The answer is D.

3.

=75,000+12,000

=$87,000

The answer is B.


Learn more about this topic:

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What Is Net Income? - Definition & Formula

from OSAT Business Education (CEOE) (040): Practice & Study Guide

Chapter 69 / Lesson 5
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