Calculate net income based on the following information. Sales = $250.00
Cost of goods sold = $160.00
Depreciation = $35.00
Interest paid = $20.00
Tax rate = 34%
A) $23.10.
B) $11.90.
C) $35.00.
D) $46.20.
E) $36.30.

Question

Quizplus · Accepted Answer

Net income is calculated as follows: 1. Gross profit = Sales - Cost of goods sold = $250.00 - $160.00 = $90.002. Operating profit = Gross profit - Depreciation = $90.00 - $35.00 = $55.003. Earnings before tax = Operating profit - Interest paid = $55.00 - $20.00 = $35.004. Tax = Earnings before tax * Tax rate = $35.00 * 34% = $11.905. Net income = Earnings before tax - Tax = $35.00 - $11.90 = $23.10

Calculate Net Income Based on the Following Information