Question

The Oakland Mills Company has disclosed the following financial information in its annual reports for the period ending March 31, 2013: sales of $1,681,000, costs of goods sold of $812,300, depreciation expenses of $175,000, and interest expenses of $89,575. Assume that the firm has a tax rate of 35 percent. What is the company's net income? Set up an income statement to answer the question.

Answer 1

Answer:

NET INCOME $392,681.25

Explanation:

To find net income we need to first calculate the pre-tax income and then calculate the tax and subtract

$pretax \: income = revenue \: - expenses$

sales 1,681,000

(COGS) (812,300)

GROSS PROFIT 868,700

(Depreciation expense) (175,000)

(Interest expense) (89,575)

pre-tax income 604,125

$pretax \: income \times rate = income \: tax \: expense$

tax income

604,125* 0.35= (211,443.75)

net income = 392,681.25