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26 May, 22:16

Emery Mining Inc. recently reported $150,000 of sales, $75,500 of cost of goods sold, and $10,200 of depreciation. The company has $16,500 of outstanding bonds that carry a 7.25% interest rate, and its income tax rate was 35%. How much was the firm's net income

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  1. 27 May, 02:02
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    The firm's net income was $41,017.4375

    Explanation:

    The company has $16,500 of outstanding bonds that carry a 7.25% interest rate.

    The interest expense of the company = $16,500 x 7.25% = $1,196.25

    Income before tax = Sales - cost of goods sold - depreciation expense - interest expense = $150,000 - $75,500 - $10,200 - $1,196.25 = $63,103.75

    Emery Mining Inc.'s income tax rate was 35%.

    Tax = Income before tax x 35% = $63,103.75 x 35% = $22,086.3125

    Net income = Income before tax - Tax = $63,103.75 - $22,086.3125 = $41,017.4375
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Home » Business » Emery Mining Inc. recently reported $150,000 of sales, $75,500 of cost of goods sold, and $10,200 of depreciation. The company has $16,500 of outstanding bonds that carry a 7.25% interest rate, and its income tax rate was 35%.
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