Question

The Fitness Studio, Inc.’s 2018 income statement lists the following income and expenses: EBIT = $538,000, interest expense = $63,000, and net income = $435,000. Calculate the 2018 taxes reported on the income statement. (Enter your answer in dollars. Round your answer to the nearest dollar amount.)

Answer 1

Answer:

$40,000

Explanation:

Given that,

EBIT = $538,000

Interest expense = $63,000

Net income = $435,000

EBT = EBIT - Interest expense

       = $538,000 - $63,000

       = $475,000

Tax reported in Income statement:

= EBT - Net income

= $475,000 - $435,000

= $40,000

Therefore, the 2018 taxes reported on the income statement is $40,000.