The net income is $161,500.
Explanation:
"Net income is the amount after all expenses have been deducted from sales."
Here, the sales is $671,000.
From the given information, the expenses can be known. The expenses included are :
- costs = $333,000
- Depreciation expense = $77,000
- Interest expense = $48,500
Therefore, the total expense is the sum of all the expenses that are given.
Total expense = costs + Depreciation expense + Interest expense
⇒ 333,000 + 77,000 + 48,500
⇒ 458,500
The total expenses is $458,500.
The amount after deducting the expenses from the sales :
⇒ 671,000 - 458,500
⇒ 212,500
Earnings before tax is $212,500
Now, the tax amount is calculated for the amount after deducting the expenses from the sales.
The tax rate is 24 %.
Therefore, 24% of 212,500 is the tax amount that must be deducted from the earnings before taxes.
⇒ (24/100) × 212,500
⇒ 51,000
The tax amount is $51,000.
To find the net income :
Net income = Earnings before taxes - Tax amount
⇒ 212,500 - 51,000
⇒ 161,500
The net income is $161,500.