Calculate net income based on the following information: sales are $300; cost of goods sold is $150,depreciation expense is $60,interest paid is $30,and the tax rate is 40%.
A)$36.00
B)$38.50
C)$40.50
D)$56.80
E)$60.00

Question

Quizplus · Accepted Answer

Net income is calculated as follows:  1. Calculate the operating income: Sales - Cost of Goods Sold - Depreciation = $300 - $150 - $60 = $90.  2. Subtract interest: $90 - $30 = $60.  3. Calculate tax: $60 * 40% = $24.  4. Subtract tax from the amount before tax: $60 - $24 = $36.  Thus, the net income is $36.00.

Calculate Net Income Based on the Following Information: Sales Are