Question

The Canavana Company gathered the following condensed data for the year ended December 31, 2019:AccountAmount (or percentage)Cost of Goods Sold$500,000Net Sales 975,000 Selling Expenses 150,000Interest Expense25,000 Administrative Expenses 175,000 Common Stock Dividends Paid50,000 Income tax percentage 35%The Canavana Company's assets at the beginning of 2019 were $900,000, and the assets were $950,000 at the end of 2019.What did the Caravan Company report as net income on its 2019 income statement

Answer 1

The Net Income to be reported is $81,250

Step-by-step explanation:

Net Sales $975,000

Cost of Goods Sold $500,000

Gross Income $475,000

Selling Expenses $150,000

Interest Expense $25,000

Administrative Expense $175,000

Total Expenses $350,000

Operating Income $125,000

Income Tax $43,750

Net Income $81,250

From this Net Income figure, the company takes the $50,000 to pay its common stock dividends.