Question

Griffin's Goat Farm, Inc., has sales of $671,000, costs of $333,000, depreciation expense of $77,000, interest expense of $48,500, and a tax rate of 24 percent.
What is the net income for this firm?

Answer 1

Net income for the firm = $161,500

Step-by-step explanation:

Step 1 :

Total sales of the goat farm = $671,000

Cost incurred = $333,000

Depreciation expense = $77,000

Interest expense = $48,500

We need to compute the net income of the firm

Step 2 :

The profit before tax can be computed by subtracting all the expenses from the sale.

Total expenses of the firm = 333,000 + 77,000+ 48,500 = $458,500

Profit before tax = 671,000 - 458,500 = $212,500

Step 3 :

Percentage of tax for the firm = 24%

Amount of tax for the firm = 24% of 212500 = 51000

Net income = Total profit after tax = 212500 - 51000 = 161,500

Step 4 :

Answer :

Net income for the firm = $161,500