A contractor's income statement shows gross profit of $1.2 million and operating expenses of $950,000. If the tax rate is 25%, what is the net income after taxes?
Correct Answer
A) $187,500
Operating income = $1,200,000 - $950,000 = $250,000. Taxes = $250,000 × 25% = $62,500. Net income = $250,000 - $62,500 = $187,500.
Why This Is the Correct Answer
Operating income = $1,200,000 - $950,000 = $250,000. Taxes = $250,000 × 25% = $62,500. Net income = $250,000 - $62,500 = $187,500.
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