Question

Suppose Ningbo Steel had sales revenue of $11,000 sales revenue, cost of goods sold of $5,000, operating expenses of $3000, interest expense of $1,000, a tax rate of 20%, and 1,000 shares of common stock outstanding. Based on this information, net profit after tax was:_________.

A. $1,600
B. $500
C. $1,000
D. $0

Answer 1

A. $1,600

Step-by-step explanation:

Ningbo Steel

Income Statement

Sales Revenue $11,000

Less Cost of goods sold $5,000

Gross Profit $6,000

Less Operating Expense $3,000

Earning Before Interest and Taxes $3,000

Less Interest Expense $1,000

Earning before Tax $2,000

Less Tax Expenses (2,000 *20%) $400

Net Profit after tax $1,600