Andre's Bakery has sales of $487,000 with costs of $263,000. Interest expense is $26,000 and depreciation is $42,000. The tax rate is 21 percent. What is the net income?

Question

Quizplus · Accepted Answer

First, calculate the Earnings Before Interest and Taxes (EBIT) by subtracting costs and depreciation from sales: $487,000 - $263,000 - $42,000 = $182,000. Then, subtract the interest expense to get the taxable income: $182,000 - $26,000 = $156,000. Finally, calculate the net income by subtracting taxes (21% of $156,000 = $32,760) from the taxable income: $156,000 - $32,760 = $123,240.

Andre's Bakery Has Sales of $487,000 with Costs of $263,000