Carla Vista Chemicals management identified the following cash flows as significant in its year-end meeting with analysts: Durin
2 answers:
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Answer: <u> Net income = $201,000</u>
Explanation:
Net income = (Sales - COGS - depreciation - interest expense)(1 - tax)
where;
Sales = $1,400,000
COGS(Cost of goods sold) = $ 800,000
Depreciation = $175,000
Interest expense = $90,000
Tax = 40%
∴ Net income = (1,400,000 - 800,000 - 175,000 - 90,000) (1 - 0.4)
Net income = 335,000 0.6
<u> Net income = $201,000</u>