Question

Given the following Balance Sheet extract, calculate the net profit on the Income Statement. (Assuming tax rate = 10% of operating profit)
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Answer 1

Step-by-step explanation:

Given the following Balance Sheet extract, calculate the net profit on the Income Statement. (Assuming tax rate = 10% of operating profit) Balance Sheet extract: Common Stock 200, Retained earnings 25 , Revenues 170, Cost of Sales (103), Salaries (30), Interest (12) I keep getting 25 for my answer, but the correct answer is 21

Answer 2

Answer:

Given the following Balance Sheet extract, calculate the net profit on the Income Statement. (Assuming tax rate = 10% of operating profit) ?

Net operating profit after tax (NOPAT) = Operating Income × (1−Tax Rate)

Where:

Operating Income=Gross profits less operating expenses

Gross profits = Revenue – Cost of Sale = 170 – 103 = 67

Operating expenses = 30

Operating Income = 67 – 30 = 37

NOPAT = 37 x (1-10%) = 37 x 0.9 = 33.3

NOPAT = 33

Step-by-step explanation: