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 9 months agoRelated Solutions
If net cash flows from operating activities were $187,000, net income were $50,000, and net sales...
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b.$237,000
c.3.7
times
d. $413,000
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A firm's operating income is 500,000 the depreciation on equipment over the last year is 50,000...
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Derrald Company's financial statements show the following items. Sales..................................................................... $200,000 Wage expense......................................................... 80,000 Accounts receivable increase
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
rent........................................... 72,000
Dividends (declared and paid)...............................
40,000
Cash paid for
wages................................................ 45,000
Depreciation expense............................................
25,000
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cash flow from operating activities? Write the dollar amount of
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A company's income statement showed the following: net income, $124,000; depreciation expense, $30,000; and gain on...
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$124,000; depreciation expense, $30,000; and gain on sale of plant
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
$6,200; accounts payable increased $3,400. Calculate the net cash
provided or used by operating activities.
Select one:
a. $155,000.
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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$135,400; depreciation expense, $32,700, and gain on sale of plant
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current liabilities showed the following changes as a result of
operating activities: accounts receivable decreased $10,300;
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A company's income statement showed the following: net income, $126,000; depreciation expense, $36,000; and gain on...
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$126,000; depreciation expense, $36,000; and gain on sale of plant
assets, $10,000. An examination of the company's current assets and
current liabilities showed the following changes accounts
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increased $4,600. Calculate the net cash provided or used by
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Multiple Choice
$176,600.
$155,400.
$148,600.
$150,600.
$135,800.
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$134,000; depreciation expense, $40,000; and gain on sale of plant
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current liabilities showed the following changes as a result of
operating activities: accounts receivable decreased $11,400;
merchandise inventory increased $28,000; prepaid expenses increased
$8,200; accounts payable increased $5,400. Calculate the net cash
provided or used by operating activities.
Multiple Choice
$140,600.
$183,000.
$157,000.
$155,000.
$161,800.
A company's income statement showed the following: net income, $127,000 and depreciation expense, $30,900. An examination...
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$127,000 and depreciation expense, $30,900. An examination of the
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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