The Red, Book Inc. sold 1,300 finance textbooks for P650 each to Brilliant University in 20X5. These books cost Red Book Inc. P450 to produce. Red Book Inc. spent P20,000 (selling expense) to convince the university to buy its books. In addition, Red Book Inc. borrowed P350,000 on January 1, 20X5, on which the company paid 10 percent interest. Both interest and principal were paid on December 31, 20X5. Red Book Inc. tax rate is 20 percent. Depreciation expense for the year was P6,000. Required: Did Red Book Inc. make a profit in 20X5? Verify your answer with an inçome statement.
The Red, Book Inc. sold 1,300 finance textbooks for P650 each to Brilliant University in 20X5. These books cost Red Book Inc. P450 to produce. Red Book Inc. spent P20,000 (selling expense) to convince the university to buy its books. In addition, Red Book Inc. borrowed P350,000 on January 1, 20X5, on which the company paid 10 percent interest. Both interest and principal were paid on December 31, 20X5. Red Book Inc. tax rate is 20 percent. Depreciation expense for the year was P6,000. Required: Did Red Book Inc. make a profit in 20X5? Verify your answer with an inçome statement.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 4 (Determination of Profitability)
The Red, Book Inc. sold 1,300 finance textbooks for P650 each to Brilliant
University in 20X5. These books cost Red Book Inc. P450 to produce. Red Book
Inc. spent P20,000 (selling expense) to convince the university to buy its books. In
addition, Red Book Inc. borrowed P350,000 on January 1, 20X5, on which the
company paid 10 percent interest. Both interest and principal were paid on
December 31, 20X5. Red Book Inc. tax rate is 20 percent. Depreciation expense
for the year was P6,000.
Required:
Did Red Book Inc. make a'profit in 20X5? Verify your answer with an inçome
statement.
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