Question

A company sells 500 shirts at a price of $15 each with a cost of goods sold of $2 per shirt. The company has selling and administrative expenses of $2,500, depreciation expenses of $500, interest expenses of $1,000, and a tax rate of 35%. Calculate the EBT

Answer 1

EBT= $5,000

Step-by-step explanation:

We need to calculate the earnings before taxes:

Sales= 500*15= 7,500

COGS= 500*2= (1,000)

Gross profit= 6,500

Depreciation= (500)

Interest= (1,000)

EBT= 5,000

Now, if we want to continue and calculate the net income:

EBT= 5,000

Tax= (5,000*0.35)= (1,750)

Depreciation= 500

Net income= 3,750