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Chapter 2: 11 (page 49)

Stein Books Inc. sold 1,900 finance textbooks for \(250 each to High Tuition University in 20X1. These books cost \)210 to produce. Stein Books spent \(12,200 (selling expense) to convince the university to buy its books. Depreciation expense for the year was \)15,200. In addition, Stein Books borrowed $104,000 on January 1, 20X1, on which the company paid 12 percent interest. Both the interest and principal of the loan were paid on December 31, 20X1. The publishing firm鈥檚 tax rate is 30 percent. Did Stein Books make a profit in 20X1? Please verify with an income statement.

Short Answer

Expert verified

Stein Books Inc. makes profit in 20X1 amounting to $25,284

Step by step solution

01

The information provided in the question are

Sales (1,900 x $250)

$475,000

Cost of sales (1,900 x $210)

399,000

Selling expenses

12,200

Depreciation expense

15,200

Interest expenses (12% of $104,000)

12,480

Tax rate

30%

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