Question

Use the following information to determine Net Income for the year ended December 31, 2020. All...

Use the following information to determine Net Income for the year ended December 31, 2020. All accounts have normal balances.

Sales Revenue $2,000,000

Interest Revenue 50,000

COGS Sold 1,000,000

Selling and Administrative expenses 200,000

Realized gain on sale of investments 10,000

Loss on Discontinued Operations (net of taxes) 100,000

Tax Rate is equal to 20%

Group of answer choices

$640,000

$688,000

$540,000

$588,000

Business   Accounting   
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Homework Answers

Answer #1

Incomes

sales revenue = $2000000

Interest revenue = $50000

Realised gain on sale of investment = $10000

Total income = $2000000+$50000+$10000 = $2060000

Expenses

COGS = $1000000

Selling and Administrative expenses = $200,000

Loss on Discontinued Operations (net of taxes) = $100,000

Rate of tax = 20%

So gross amount of  Loss on Discontinued Operations = ($100000/(100-20))*100 =$125000

Total expenses =$1000000+$200000+$125000 = $1325000

So Net Income = $2060000-$1325000 =$735000

Tax =$735000*20% = $147000

Income after tax = $735000-$147000 = $588000

So the correct answer is last option

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