Question

During the fiscal year ended 2014, a company had revenues of $340,000, cost of goods sold of $215,000, and an income tax rate of 30 percent on income before income taxes. What was the company's 2014 net income?

a. $87,500b. $102,000c. $37,500d. $340,000

Answer 1

correct option is a. $87,500

Step-by-step explanation:

given data

revenues = $340,000

cost of goods sold = $215,000

income tax rate = 30 percent

solution

first we get here income before income tax that is

income before income tax = revenues - cost of goods sold .........1

income before income tax = $340,000 - $215,000

income before income tax = $125000

and

income tax expenses will be

income tax expenses = 30% of $125000

income tax expenses = 0.30 × $125000

income tax expenses = $37500

so

net income will be

net income = income before income tax - income tax expenses .............2

net income = $125000 - $37500

net income = $87500

so correct option is a. $87,500