Use the balance sheets and information provided about revenue and expenses to answer the question.

Torche Corporation
Balance Sheet
As of December 31, 2023
(amounts in thousands)

Cash

139,000

Accounts Payable

17,000

Accounts Receivable

33,000

Debt

35,000

Inventory

40,000

Other Liabilities

27,000

Property Plant & Equipment, Gross

214,000

**Total Liabilities**

**79,000**

Accumulated Depreciation

78,000

Paid-In Capital

59,000

Property Plant & Equipment, Net

136,000

Retained Earnings

216,000

Other Assets

6,000

**Total Equity**

**275,000**

**Total Assets**

**354,000**

**Total Liabilities & Equity**

**354,000**

Torche Corporation
Balance Sheet
As of March 31, 2024
(amounts in thousands)

Cash

136,000

Accounts Payable

7,000

Accounts Receivable

23,000

Debt

25,000

Inventory

40,000

Other Liabilities

29,490

Property Plant & Equipment, Gross

214,000

**Total Liabilities**

**61,490**

Accumulated Depreciation

78,800

Paid-In Capital

59,000

Property Plant & Equipment, Net

135,200

Retained Earnings

217,710

Other Assets

4,000

**Total Equity**

**276,710**

**Total Assets**

**338,200**

**Total Liabilities & Equity**

**338,200**

Revenue and expenses information from January 1 to March 31, 2024 were:
Sales Revenue of $7,900,000
COGS of 30% of Sales
Interest of $160,000
Other Expenses of $700,000
SG&A of $790,000
Tax Rate of 38%

**What is the net income in the first quarter of 2024?**

Note: Revenue and expense amounts are provided in dollars but the financial statement units are thousands of dollars.

Round the income taxes amount to the nearest integer when you apply the tax rate.

Please specify your answer in the same units as the financial statements (i.e., enter the number from your completed income statement).

To calculate the net income for Torche Corporation in the first quarter of 2024, we'll follow the same process as before, using the provided revenue and expense data.

### Step 1: Calculate Gross Profit
Gross Profit is calculated as:
\[
\text{Gross Profit} = \text{Sales Revenue} - \text{COGS}
\]
Where:
\[
\text{COGS} = 30\% \times \text{Sales Revenue}
\]
\[
\text{COGS} = 0.30 \times 7,900,000 = 2,370,000 \text{ dollars}
\]
\[
\text{Gross Profit} = 7,900,000 - 2,370,000 = 5,530,000 \text{ dollars}
\]

### Step 2: Calculate Operating Income
Operating Income is calculated by subtracting SG&A and Other Expenses from Gross Profit:
\[
\text{Operating Income} = \text{Gross Profit} - \text{SG&A} - \text{Other Expenses}
\]
\[
\text{Operating Income} = 5,530,000 - 790,000 - 700,000 = 4,040,000 \text{ dollars}
\]

### Step 3: Calculate Earnings Before Taxes (EBT)
EBT is calculated by subtracting interest expense from Operating Income:
\[
\text{EBT} = \text{Operating Income} - \text{Interest Expense}
\]
\[
\text{EBT} = 4,040,000 - 160,000 = 3,880,000 \text{ dollars}
\]

### Step 4: Calculate Income Tax Expense
Income Tax Expense is calculated as:
\[
\text{Income Tax} = \text{EBT} \times \text{Tax Rate}
\]
\[
\text{Income Tax} = 3,880,000 \times 38\% = 1,474,400 \text{ dollars}
\]

### Step 5: Calculate Net Income
Net Income is calculated by subtracting Income Tax from EBT:
\[
\text{Net Income} = \text{EBT} - \text{Income Tax}
\]
\[
\text{Net Income} = 3,880,000 - 1,474,400 = 2,405,600 \text{ dollars}
\]

### Convert Net Income to Thousands
Since the financial statements are in thousands of dollars:
\[
\text{Net Income} = \frac{2,405,600}{1,000} = 2,405.6 \text{ thousand dollars}
\]

### Final Answer
The net income for the first quarter of 2024, rounded to the nearest thousand, is:
\[
\boxed{2,406 \text{ thousand dollars}}
\]

Would you like any details or have any questions?

---

Here are 8 follow-up questions related to this problem:
1. How would an increase in the interest expense impact the net income?
2. What would happen to the net income if the tax rate was reduced to 30%?
3. How does a decrease in SG&A expenses influence operating income?
4. What is the effect of a higher COGS percentage on gross profit?
5. How would an increase in accounts receivable affect the cash balance?
6. Why is it important to monitor changes in retained earnings between periods?
7. How do liabilities affect the equity of the company?
8. What are the implications of changes in accumulated depreciation on net property, plant, and equipment?

**Tip:** Always verify your income statement calculations with the changes in retained earnings on the balance sheet to ensure consistency and accuracy.

Learn how to calculate the net income for Torche Corporation in the first quarter of 2024 using provided financial data. Includes step-by-step calculations for gross profit, operating income, income tax, and final net income. Suitable for financial analysts and business students.

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