Bullseye, Inc.'s 2013 income statement lists the following income and expenses: EBIT = $900,000, interest expense = $85,000, and net income = $570,000. What are the 2013 taxes reported on the income statement?
A)$245,000
B)$330,000
C)$815,000
D)There is not enough information to calculate 2013 taxes.

Question

Quizplus · Accepted Answer

To find the taxes, we first calculate the taxable income: Taxable Income = EBIT - Interest Expense = $900,000 - $85,000 = $815,000. Then, using the net income formula: Net Income = Taxable Income - Taxes, we rearrange to find Taxes = Taxable Income - Net Income = $815,000 - $570,000 = $245,000.