Question

You and a partner are considering the purchase of a convenience store.? The store has annual sales of $500,000 and is paying annual payroll of $100,000. The cost of goods sold every year is $150,000. The firm has miscellaneous expenses (taxes, insurance, garbage, electricity, natural gas, security, maintenance, property taxes, training, advertising, accounting fees, bank charges, etc.) of roughly $68,000 per year. If depreciation is equal to $15,000 per year and the tax rate is equal to 38% then what is the net income?

Answer 1

the net income is $103,540

Step-by-step explanation:

The computation of the net income is shown below:

= (Annual sales - annual payroll - cost of goods sold - miscellaneous expenses - depreciation expense) × (1 - tax rate)

= ($500,000 - $100,000 - $150,000 - $68,000 - $15,000) × (1 - 38%)

= $103,540

Hence, the net income is $103,540

We simply applied the above formula