Question

Cookies by Casey has sales of 487,000 with costs of 263,000. The interest expense is 26,000 and the depreciation is 42,000. What is the net income?

1) 200,000
2) 150,000
3) 100,000
4) 50,000

Answer 1

The net income for Cookies by Casey is calculated by subtracting the costs, interest expense, and depreciation from the sales revenue, resulting in a net income of $156,000.

Step-by-step explanation:

The calculation of net income for Cookies by Casey involves subtracting all costs including costs of goods sold, interest expense, and depreciation from the revenue. Here's how you calculate it:

Start with the sales revenue: $487,000

Subtract the costs of goods sold: $487,000 - $263,000 = $224,000

Subtract the interest expense: $224,000 - $26,000 = $198,000

Subtract the depreciation: $198,000 - $42,000 = $156,000

The net income would thus be $156,000 after accounting for all the given expenses, which corresponds to option 2 in the list provided.

Answer 2

To find the net income for Cookies by Casey, subtract the sum of costs, depreciation, and interest expense from the sales. The resulting net income is $156,000, which is closest to the provided option of $150,000.2) 150,000

Step-by-step explanation:

To calculate the net income for Cookies by Casey, we need to follow these steps:

• First, subtract the costs and depreciation from the sales, which gives us the pre-tax income.
• Then, subtract the interest expense to obtain taxable income.
• Finally, assuming there are no taxes or other expenses, the taxable income is the net income.

So, Cookies by Casey's net income calculation would be:

1. Sales: $487,000
2. Costs: $263,000
3. Depreciation: $42,000
4. Interest Expense: $26,000
5. Net Income = Sales - (Costs + Depreciation + Interest Expense) = $487,000 - ($263,000 + $42,000 + $26,000) = $487,000 - $331,000 = $156,000.

Therefore, the closest option to Casey's net income is $150,000.