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29 March, 07:28

During the fiscal year ended 2014, a company had revenues of $340,000, cost of goods sold of $215,000, and an income tax rate of 30 percent on income before income taxes. What was the company's 2014 net income?

a. $87,500b. $102,000c. $37,500d. $340,000

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Answers (1)
  1. 29 March, 07:54
    0
    correct option is a. $87,500

    Explanation:

    given data

    revenues = $340,000

    cost of goods sold = $215,000

    income tax rate = 30 percent

    solution

    first we get here income before income tax that is

    income before income tax = revenues - cost of goods sold ... 1

    income before income tax = $340,000 - $215,000

    income before income tax = $125000

    and

    income tax expenses will be

    income tax expenses = 30% of $125000

    income tax expenses = 0.30 * $125000

    income tax expenses = $37500

    so

    net income will be

    net income = income before income tax - income tax expenses ... 2

    net income = $125000 - $37500

    net income = $87500

    so correct option is a. $87,500
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