Question

Consider the following information for Burgundy Company:

Operating income $50,000
Tax rate 30%
Based on the given information, Burgundy's net income will be:
a. $45,000.
b. $40,000.
c. $35,000.
d. $30,000.

Answer 1

Burgundy Company's net income will be $35,000, as calculated based on the given operating income and tax rate.

Step-by-step explanation:

To calculate Burgundy Company's net income, we need to understand that net income is equal to operating income minus taxes. Given that the operating income is $50,000 and the tax rate is 30%, we can calculate the net income as follows:

Net income = Operating income - (Tax rate * Operating income)

Substituting the given values, Net income = $50,000 - (30% * $50,000) = $50,000 - $15,000 = $35,000.

Therefore, the correct answer is c. $35,000.