Question
In: Finance
A firm's financial statements showed sales of 400,000 net income of 50,000 operating expense of 80,000...
A firm's financial statements showed sales of 400,000 net income of 50,000 operating expense of 80,000 accounts payable of 160,000 and a cost of goods sold of 200,000. If the company's tax rate is 28% and the only missing expense is interest, what is the company's interest expense?
Solutions
Expert Solution
| Step-1:Calculation of earning before tax | |||||
| Earning before tax | = | Net Income / (1-Tax rate) | |||
| = | 50000/(1-0.28) | ||||
| = | $ 69,444.44 | ||||
| Step-2:Calculation of earning before interest and taxes | |||||
| Sales | $ 4,00,000 | ||||
| Less cost of goods sold | $ 2,00,000 | ||||
| Gross Profit | $ 2,00,000 | ||||
| Less operating expense | $ 80,000 | ||||
| Earning before interest and taxes | $ 1,20,000 | ||||
| Note: | |||||
| Accounts payable is current liability that is shown in balance sheet , not in income statement. | |||||
| Step-3:Calculation of interest expense | |||||
| Interest Expense | = | Earning before interest and Taxes | - | Earning Before Taxes | |
| = | $ 1,20,000 | - | $ 69,444.44 | ||
| = | $ 50,555.56 | ||||
jeff jeffy answered 8 months agoRelated Solutions
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b.$237,000
c.3.7
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d. $413,000
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Derrald Company's financial statements show the following
items.
Sales.....................................................................
$200,000
Wage
expense.........................................................
80,000
Accounts receivable increase................................
36,000
Loss on sale of equipment.....................................
13,000
Rent
revenue...........................................................
50,000
Cash collected for
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Dividends (declared and paid)...............................
40,000
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Depreciation expense............................................
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assets, $14,000. An examination of the company's current assets and
current liabilities showed the following changes as a result of
operating activities: accounts receivable decreased $9,400;
merchandise inventory increased $18,000; prepaid expenses decreased
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Select one:
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b. $145,800.
c. $141,000.
d. $139,000.
Please Solve As...
A company's income statement showed the following: net income, $135,400; depreciation expense, $32,700, and gain on...
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Multiple Choice
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$148,600.
$150,600.
$135,800.
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operating activities: accounts receivable decreased $11,400;
merchandise inventory increased $28,000; prepaid expenses increased
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Multiple Choice
$140,600.
$183,000.
$157,000.
$155,000.
$161,800.
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company's current assets and current liabilities showed the
following changes: accounts receivable decreased $9700; merchandise
inventory increased $18,600; and accounts payable increased $3700.
Calculate the net cash provided or used by operating
activities.
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