Two companies have the following balance sheets as of December 31, 20X8: In 20X9, each company had
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In 20X9, each company had sales of $700,000 and operating expenses of $600,000. Sunriver had not repaid the $125,000 Note Payable as of December 31, 20X9. Neither company incurred any new interest-bearing debt in 20X9. Ignore income taxes. Did the two companies earn the same net income and the same operating income? Explain, showing computations of operating income and net income.
Transcribed Image Text:
Sunriver Company Cash Other assets Total $75,000 Note payable* 150,000 Stockholders' equity $225,000 Total $125,000 100,000 $225,000 6% annual interest. Black Butte Company Cash Other assets Total $75,000 Stockholders' equity 150,000 $225,000
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Related Book For
Introduction to Financial Accounting
ISBN: 978-0133251036
11th edition
Authors: Charles Horngren, Gary Sundem, John Elliott, Donna Philbrick
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