During the year, the Senbet Discount Tire Company had gross sales of $1.16 milli
ID: 2738561 • Letter: D
Question
During the year, the Senbet Discount Tire Company had gross sales of $1.16 million. The firm’s cost of goods sold and selling expenses were $535,000 and $225,000, respectively. The firm also had notes payable of $900,000. These notes carried an interest rate of 6 percent. Depreciation was $140,000. The firm’s tax rate was 35 percent.
a. What was the firm’s net income? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
Net income $____
b. What was the firm’s operating cash flow? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
Operating cash flow $____
Explanation / Answer
Gross Sales 1160000 Less: Cost of Goods sold 535000 Selling Expenses 225000 760000 Operating Cash Flows 400000 Less: Interest -54000 900000*6% Depreciation -140000 Net Income 206000 Less: Taxes 35% 72100 Income after Taxes 133900 Net Income is $133,900 Operating Cash Flows = $400,000
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