Emery Mining Inc. recently reported $167,500 of sales, $75,500 of operating costs other than depreciation, and $10,200 of depreciation. The company had $16,500 of outstanding bonds that carry a 7.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was the firm's net income? The firm uses the same depreciation expense for tax and stockholder reporting purposes.

Question

Donald Mayer

Business

1 December, 12:46

Emery Mining Inc. recently reported $167,500 of sales, $75,500 of operating costs other than depreciation, and $10,200 of depreciation. The company had $16,500 of outstanding bonds that carry a 7.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was the firm's net income? The firm uses the same depreciation expense for tax and stockholder reporting purposes.

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Answers (1)

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Hassan Branch · Answer 1

The net income of Emery Mining = $53,947.56

Explanation:

Given:

Sales in Emery Mining = $167,500

Operating cost = $75,500

Depreciation cost = $10,200

Outstanding bonds = $16,500

Interest rate = 7.25%

federal-plus-state income tax rate = 35%

Net Income After Tax = Net Income Before Tax - Tax Net Income

Net Income Before Tax = 167,500-75,500-10,200 + (16500*0.0725)

= 82,996.25

Tax net income = 0.35*Net Income Before Tax

= 0.35*82,996.25

= 29,048.687

Net Income After Tax = 82,996.25 - 29,048.687

= 53,947.56

Net Income After Tax = $53,947.56