Mart's Boutique has sales of $820,000 and costs of $540,000.Interest expense is $36,000 and depreciation is $59,000.The tax rate is 21 percent.What is the net income?

Question

Quizplus · Accepted Answer

Net income is calculated as follows: Sales - Costs - Interest Expense - Depreciation - Taxes = Net Income. First, calculate the Earnings Before Interest and Taxes (EBIT): $820,000 - $540,000 = $280,000. Then, subtract the interest expense: $280,000 - $36,000 = $244,000. Next, subtract depreciation: $244,000 - $59,000 = $185,000. Calculate the tax: $185,000 * 21% = $38,850. Finally, subtract the tax from the earnings before taxes to get the net income: $185,000 - $38,850 = $146,150.

Mart's Boutique Has Sales of $820,000 and Costs of $540,000