Using the information provided, calculate net income for 2017. Assume a tax rate of 35 percent. Year 2017
Inventory $5,000
Revenues 200,000
Depreciation expense 5,000
Cost of goods sold 100,000
Interest expense 10,000
Operating expenses 30,000
A) $35,750
B) $44,000
C) $50,000
D) $19,250

Question

Quizplus · Accepted Answer

Net income is calculated as Revenues minus all expenses and taxes. Here, Revenues ($200,000) minus Cost of Goods Sold ($100,000), Operating Expenses ($30,000), Depreciation ($5,000), and Interest Expense ($10,000) gives Earnings Before Tax (EBT) of $55,000. After applying a 35% tax rate, the net income is $35,750.

Using the Information Provided, Calculate Net Income for 2017