Calculate net income based on the following information. Sales are $250,cost of goods sold is $160,depreciation expense is $35,interest paid is $20,and the tax rate is 34%.
A) $11.90
B) $23.10
C) $35.00
D) $36.30
E) $46.20

Question

Quizplus · Accepted Answer

Net income is calculated as follows: Sales - Cost of Goods Sold - Depreciation - Interest = Earnings Before Tax (EBT). Then, EBT - Taxes = Net Income. Here, EBT = $250 - $160 - $35 - $20 = $35. Taxes = 34% of $35 = $11.90. Therefore, Net Income = $35 - $11.90 = $23.10.

Calculate Net Income Based on the Following Information