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

Net Income = $642,000

Step-by-step 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