EXERCISE 3-17 (30 MINUTES)

5. Froya Fabrikker A/S

Income Statement

Sales... Nkr 1,200,000

Less cost of goods sold... 795,000

Gross margin ... 405,000

Less selling and administrative expenses:

Advertising expense... Nkr 136,000

Utilities expense ... 7,000

Salaries expense ... 110,000

Depreciation expense ... 19,000

Rent expense ... 18,000 290,000

Net operating income ... Nkr 115,000