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Correct option is: D. $117,330 | |||
Workings: | |||
Computation of Net Income: | |||
Revenue | = | $ 2,90,000 | |
Less: | Cost of goods sold | = | $ -75,000 |
Less: | Salaries expense | = | $ -13,000 |
Less: | Interest expense | = | $ -3,200 |
Less: | Insurance expense ($6500 / 2 years) | = | $ -3,250 |
Gross Income | = | $ 1,95,550 | |
Less: | Income tax expense ($195550 X 40%) | = | $ -78,220 |
Net Income | = | $ 1,17,330 |
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