During 2015, Rainbow Umbrella Corp. had sales of $730,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $450,000, $90,000, and $160,000, respectively. In addition, the company had an interest expense of $92,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

a. What is the company's net income for 2015?

Question

Business

Owen Roberts

21 October, 16:43

During 2015, Rainbow Umbrella Corp. had sales of $730,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $450,000, $90,000, and $160,000, respectively. In addition, the company had an interest expense of $92,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

a. What is the company's net income for 2015?

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Jamie · Answer 1

The company's net income for 2015 is loss $62,000 (-$62,000)

Explanation:

During 2015, Rainbow Umbrella Corp. had sales of $730,000

Total expense for 2015 = Cost of goods sold + Administrative and selling expenses + Depreciation expenses + Interest expense = $450,000 + $90,000 + $160,000 + $92,000 = $792,000

Sales - Total expense = $730,000 - $792,000 = - $62,000<0

The company recorded loss in 2015 the amount of $62,000 and didnot have to pay tax.