Findoperating incomeearnings before interest and taxesearnings before taxesincome tax expenses PROBLEM D. SABINI operates a merchandising business. His capital amounted to P3,600,000 at the end of2020.Based on his 2021 accounting records, Owner's, Capital increased by 15%. His withdrawals equaled 70% ofthe increase in capital. Capital contributions equaled to 1/4 of beginning capital. Tax rate is 20% while grossprofit rate is 35%.A breakdown of his expenses for 2021 showed the following: cost of goods sold - 2,600,000; ; selling expense- 925,000; other expense- 25,000; interest expense 35,000 and other income - 25,000.

Solution Concept Operating income means the income that is generated from the regular operations of…

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Business

Accounting

Find operating income earnings before interest and taxes earnings before taxes income tax expenses

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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Concept explainers

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

Find operating income earnings before interest and taxes earnings before taxes income tax expenses

PROBLEM D. SABINI operates a merchandising business. His capital amounted to P3,600,000 at the end of
2020.
Based on his 2021 accounting records, Owner's, Capital increased by 15%. His withdrawals equaled 70% of
the increase in capital. Capital contributions equaled to 1/4 of beginning capital. Tax rate is 20% while gross
profit rate is 35%.
A breakdown of his expenses for 2021 showed the following: cost of goods sold - 2,600,000; ; selling expense
- 925,000; other expense- 25,000; interest expense 35,000 and other income - 25,000.

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