Capital Industries' president receives a bonus equal to 6% of net income.This bonus is included in the determination of net income.If the company's income before bonus was $3,800,000,the amount of the bonus is:

Question

Quizplus · Accepted Answer

The bonus is 6% of the net income, which means net income = income before bonus - bonus. Let's denote net income as NI and the bonus as B. We have B = 6% of NI, and NI = $3,800,000 - B. By substituting B = 0.06NI into the equation, we get NI = $3,800,000 - 0.06NI. Solving for NI gives NI = $3,800,000 / 1.06, which equals approximately $3,584,905.66. Therefore, the bonus B = 0.06 * $3,584,905.66 ≈ $215,094.

Capital Industries' President Receives a Bonus Equal to 6% of Net