Question

Bulldozer Mining Inc. recently reported $350,000 of sales, $80,000 of operating costs other than depreciation, and $10,000 of depreciation. The company had $18,500 of outstanding bonds that carry a 6.5% interest rate, and its federal-plus-state income tax rate was 35%. How much was the firm’s net income? The firm uses the same depreciation expense for tax and stockholder reporting purposes.

Answer 1

Step-by-step explanation:

$

Sales 350,000

Operating costs (80,000)

Depreciation (10,000)

Profit before Interest & Tax 260,000

Interest charge @ 6.5% ( 1,203)

Profit before Tax 258,797

Tax @ 35% ( 90,579)

Net Income 168,218

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