Question

Miller Microbrewery recently had $21,500 in sales, $14,800 of operating costs other than depreciation, and $2,100 of depreciation. The company had $14,000 of bonds outstanding with a 8% interest rate, and its federal-plus-state income tax rate was 40%.

1.How much was the firm's taxable income?

2. What was net income?

Intro Miller Microbrewery recently had $21,500 in sales, $14,800 of operating costs other than depreciation, and $2,100 of depreciation. The company had $14,000 of bonds outstanding with a 8% interest rate, and its federal-plus-state income tax rate was 40%. Part 1 | Attempt 1/6 for 10 pts. How much was the firm's taxable income (or earnings before taxes (EBT))? 0+ decimals Submit | Attempt 1/6 for 10 pts. Part 2 What was net income? 0+ decimals Submit

Answer 1

1.)		Amount $
	Sales	21,500
	Less: Operating costs other than depreciation	14,800
	Less: Depreciation	2,100
	Earning before interest and tax	4,600
	Less: Interest Expense ( 14,000 x 8% )	1,120
	Firm's Taxable Income/EBIT	3,480
2.)		Amount $
	Firm's Taxable Income/EBIT	3,480
	Less: Income Tax @40%	1,392
	Net income	2,088