Question

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’s tax rate is 30 percent. Did Stein Books make a profit in 20X1? Please verify with an income statement.

Short answer

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

Step-by-step solution

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%