Year Two Year Three 2,00,000 3,00,000 22,00,000 35,00,000 349Each Year 3.75,000

Question

Year Two Year Three 2,00,000 3,00,000 22,00,000 35,00,000 349Each Year 3.75,000 3.50,000 18,25,000 11,50,oo0 2,60,000-2,35,00o 15,65,000 9,15,00o 60,000 15,000 50,000 15,50,0007,60,000 5,27,0002,58,400 10, 23,000 5,01,60o Starting Cash Net Sales Cost of Sales Gross Income Year One 5,00,000 20,00,000 3,50,000 16,50,000 Taxes Operating Expenses (SG&A;) 2,35,000 14,15,000 40,000 Operating Income Other Income (Expense) Extraordinary Gain (Loss) Interest Expense Net Profit Before Taxes (Pretax ncome) Taxes Net Income 70,000 50,000 14,10,000o 4,18,100 9,96,900 50,000

Explanation / Answer

Net Sales - Cost of Sales - Operating Expenses - Interest expense + other income = Net profit before tax

20,00,000 - 3,50,000 -2,35,000 - 50,000 + 40,000 = 14,05,000

So correct value for the net income before tax = 14,05,000 and 14,10,000 is incorrect.

I have given the formula and the calculation.

Hope this helps!

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