Question

Misty Company reported the following before-tax items during the current year: Sales revenue $ 750 Selling and administrative expenses 350 Restructuring charges 20 Loss on discontinued operations 40 Misty's effective tax rate is 25%. What is Misty's net income for the current year?

Answer 1

Answer:

$285

Explanation:

Misty's net income for the year is calculated as follows,

Sales revenue = $750

Administrative expenses = 350

Restructuring charges = 20

Loss on discontinued operation = 40

Misty effective tax rate = 20%

∴ Misty's net income for the year will be

[ 750 - 350 - 20] × [ 1 - 0.25]

= $285.