Question

Benson, Inc., has sales of 42,030, costs of13,650, depreciation expense of 2,950, and interest expense of2,150. The tax rate is 25 percent. What is the net income of Benson, Inc.?

1) $22,250
2) $22,500
3) $22,750
4) $23,000

Answer 1

The net income of Benson, Inc. is $17,460.

Step-by-step explanation:

To calculate the net income of Benson, Inc., we need to subtract the costs, depreciation expense, and interest expense from the sales. Sales minus costs is $42,030 - $13,650 = $28,380. Then, subtracting the depreciation expense and interest expense, we have $28,380 - $2,950 - $2,150 = $23,280.

Next, we need to calculate the tax amount by multiplying the net income by the tax rate. 25% of $23,280 is $5,820.

Finally, to find the net income, we subtract the tax amount from the net income before taxes: $23,280 - $5,820 = $17,460.