The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: RailsDivisionLocomotiveDivisionCorporateTotalCost of goods sold$46,700 $29,300 Direct operating expenses26,400 20,400 Sales98,200 69,700 Interest expense $2,200 General overhead 19,900 Income tax 4,500 The net income for Train Corporation isa.$73,800b.$91,900c.$18,500

Given that, Train corporation's financial information for the ended December 31 : It has two divisions. They are : 1. Rails Division 2. Locomotive Division The given cost of goods , sales and direct operating expenses of both Rails and Locomotive Divisions should be included in Train corporation.Calculation of Net income for Train corporation : (amount in $) Particulars Rails Division Locomotive Division TRAIN CORPORATION Sales Less : Cost of goods sold Direct operating expenses Gross Income Less : General overhead Interest expense Net income before tax Less : Taxes 98200 46700 26400 69700 29300 20400 167900 (76000) (46800) 45100 (19900) (2200) 23000 (4500) Net income after taxes 18500 Hence, Net income of Train corporation = $18500. Therefore, option c is the correct answer. The other options a and b are incorrect since they are invalid for the calculation of Net income of Train corporation.

Answered: The following financial information was…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31:

	Rails Division	Locomotive Division	Corporate Total
Cost of goods sold	$46,700	$29,300
Direct operating expenses	26,400	20,400
Sales	98,200	69,700
Interest expense			$2,200
General overhead			19,900
Income tax			4,500

The net income for Train Corporation is

a.$73,800

b.$91,900

c.$18,500

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