For the past year, Momsen, Ltd., had sales of $46,772, interest expense of $4,010, cost of goods sold of $17,009, selling and administrative expense of $11,956, and depreciation of $6,705. If the tax rate was 40 percent, what was the company's net income? Multiple Choice $4,255 $7,092 $2,651 $11,429 $4,964

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akasiano0001 akasiano0001 · Answer 1 · 2024-01-06T00:49:36+01:00

To calculate the company's net income, we need to subtract all the expenses from the sales and then apply the tax rate.

First, let's calculate the total expenses:

- Cost of goods sold: $17,009

- Selling and administrative expense: $11,956

- Depreciation: $6,705

- Interest expense: $4,010

Total expenses = $17,009 + $11,956 + $6,705 + $4,010 = $39,680

Next, let's calculate the taxable income:

Taxable income = Sales - Total expenses = $46,772 - $39,680 = $7,092

Finally, let's calculate the net income:

Net income = Taxable income - (Tax rate * Taxable income)

Net income = $7,092 - (0.4 * $7,092)

Net income = $7,092 - $2,836.80

Net income = $4,255.20

Therefore, the company's net income is $4,255.