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16 May, 16:01

Emily Lim owns and runs an ice cream parlor in San Diego. Last year, she had sales of $430,000 and an average tax rate of 34%. She spent $43,000 on ingredients, $21,500 on utilities, and $77,400 to rent the premises Emily has a few employees and paid them $86,000 in wages in total. She also paid herself a salary of $64,500 and spent $43,000 to pay for employee benefits A few years ago, Emily borrowed money to buy the ice making equipment. Last year, she paid $21,500 in interest on that loan. Depreciation for the equipment was $12,900 Attempt 1 / 1 for 10 pts. Part 1 What was operating income (EBIT) for the year?

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  1. 16 May, 16:11
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    1). EBIT = Sales - Expenses - Depreciation

    Sales = 430,000

    Ingredients expenses = 43,000

    Utilities expenses = 21,500

    Rent expense = 77,400

    Salary payments = 86,000

    Salary to herself = 64,500

    Employee benefits expenses = 43,000

    Depreciation = 12,900

    EBIT = $430,000 - $43,000 - $21,500 - $77,400 - $86,000 - $64,500 - $43,000 - $12,900 = $81,700
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