Amy's Dress Shoppe has sales of $421,000 with costs of $342,000. Interest expense is $18,000 and depreciation is $33,000. The tax rate is 34 percent. What is the net income?

Question

Quizplus · Accepted Answer

To calculate net income, first find the earnings before interest and taxes (EBIT): Sales - Costs - Depreciation = $421,000 - $342,000 - $33,000 = $46,000. Then, subtract interest expense: $46,000 - $18,000 = $28,000. Calculate taxes: $28,000 * 34% = $9,520. Finally, subtract taxes from the amount before taxes: $28,000 - $9,520 = $18,480.

Amy's Dress Shoppe Has Sales of $421,000 with Costs of $342,000