Find (a) the gross profit, (b) the net income before taxes, and (c) the net income after taxes.
-Eddie's TV and Appliance had gross sales of $619,000, returns of $27,000, operating expenses of $153,000, taxes of $30,950, and a cost of goods sold of $241,000.

Question

Quizplus · Accepted Answer

Gross profit = gross sales - returns - cost of goods sold = $619,000 - $27,000 - $241,000 = $351,000
Net income before taxes = gross profit - operating expenses = $351,000 - $153,000 = $198,000
Net income after taxes = net income before taxes - taxes = $198,000 - $30,950 = $167,050. Therefore, option A is the correct answer. Gross Profit = Sales - Cost of Goods Sold
Gross Profit = $619,000 - $241,000
Gross Profit = $378,000

Net Income Before Taxes = Gross Profit - Operating Expenses
Net Income Before Taxes = $378,000 - $153,000
Net Income Before Taxes = $225,000

Net Income After Taxes = Net Income Before Taxes - Taxes
Net Income After Taxes = $225,000 - $30,950
Net Income After Taxes = $194,050

Therefore, the best choice is A because it correctly identifies the gross profit, net income before taxes, and net income after taxes.

Find (A) the Gross Profit, (B) the Net Income Before