Question

Rogue Industries reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; and average tax rate = 40%. What is the company’s Net Income?Try answering the question by recreating the company’s entire Income Statement as much as possible.

Answer 1

Answer:

Net Income = $642,000

Explanation:

                                            Income Statement

Sales                                               3,000,000

Less: Cost of Goods Sold             (1,500,000)

Gross Profit                                     1,500,000

Less: Administrative Expenses       (150,000)

         Marketing Expenses               (80,000)

         Depreciation Expense           (170,000)

Operating Income                            1,100,000

Less: Interest Expense                       (30,000)

Earnings before Taxes                     1,070,000

Less: Taxes (40%)                             (428,000)

Net Income                                         642,000