Final answer:
Belyk Paving Co.'s net income is calculated by subtracting all expenses from sales and adjusting for taxes. However, with a negative earnings before taxes (EBT) of $140,000 and ignoring any tax implications, the company incurs a net loss of $140,000 for the year.
Step-by-step explanation:
In order to calculate the company's net income, we need to take into account all revenues and expenses. Here's how the calculation is done:
- Sales: $2,350,000
- Cost of Goods Sold: -$1,295,000
- Administrative and Selling Expenses: -$530,000
- Depreciation Expense: -$420,000
- Interest Expense: -$245,000
We first determine the earnings before interest and taxes (EBIT) by subtracting the cost of goods sold, administrative and selling expenses, and depreciation expense from sales. This gives:
EBIT = Sales - Cost of Goods Sold - Administrative and Selling Expenses - Depreciation Expense = $2,350,000 - $1,295,000 - $530,000 - $420,000 = $105,000
After that, we subtract the interest expense to obtain the earnings before taxes (EBT):
EBT = EBIT - Interest Expense = $105,000 - $245,000 = -$140,000
Since the EBT is negative, this would typically imply a tax credit, but as per the instruction to ignore any tax loss carryback or carryforward provisions, the tax is considered as $0. Therefore, the company's net income is equal to the EBT, because there is no tax expense due to the loss.
Net Income = EBT = -$140,000
The company has a net loss of $140,000 for the year, which can be used in future tax filings assuming tax carryforward is allowed.