Question

Nataro, Incorporated, has sales of $702,000, costs of $345,000, depreciation expense of $90,000, interest expense of $55,000, and a tax rate of 22 percent. What is the net income for this firm? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.

Answer 1

To calculate the net income for Nataro, Incorporated, subtract all the expenses from the sales revenue and apply the tax rate. The net income is $165,360.

Step-by-step explanation:

To calculate the net income for Nataro, Incorporated, we need to subtract all the expenses (costs, depreciation expense, interest expense, and taxes) from the sales revenue. Let's break it down step by step:

1. Calculate the total expenses: $345,000 (costs) + $90,000 (depreciation expense) + $55,000 (interest expense) = $490,000
2. Calculate the taxable income: $702,000 (sales) - $490,000 (total expenses) = $212,000
3. Calculate the tax amount: $212,000 (taxable income) x 0.22 (tax rate) = $46,640
4. Calculate the net income: $212,000 (taxable income) - $46,640 (tax amount) = $165,360

Therefore, the net income for Nataro, Incorporated is $165,360.