The Las Vegas Corporation is considering expanding sales by $70,000 by selling o

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The Las Vegas Corporation is considering expanding sales by $70,000 by selling on credit. The Corporation's cash sales averaged $400,000 per year for the last three years. Its cost of goods sold was approximately 60% of sales, its operating expenses were 30% of sales, and its income taxes expense averaged 35% of income before taxes. The company predicts that its cost and expense percentages will remain the same, but only 92% of the credit sales will be able to be collected. For the coming year, the company expects cash sales to be $420,000 and credit sales to be $70,000. Determine the Corporation's expected net income for the coming year. a. $27,300 b. $31,850 c. $28,210 d. $43,400 The Las Vegas Corporation is considering expanding sales by $70,000 by selling on credit. The Corporation's cash sales averaged $400,000 per year for the last three years. Its cost of goods sold was approximately 60% of sales, its operating expenses were 30% of sales, and its income taxes expense averaged 35% of income before taxes. The company predicts that its cost and expense percentages will remain the same, but only 92% of the credit sales will be able to be collected. For the coming year, the company expects cash sales to be $420,000 and credit sales to be $70,000. Determine the Corporation's expected net income for the coming year. a. $27,300 b. $31,850 c. $28,210 d. $43,400 The Las Vegas Corporation is considering expanding sales by $70,000 by selling on credit. The Corporation's cash sales averaged $400,000 per year for the last three years. Its cost of goods sold was approximately 60% of sales, its operating expenses were 30% of sales, and its income taxes expense averaged 35% of income before taxes. The company predicts that its cost and expense percentages will remain the same, but only 92% of the credit sales will be able to be collected. For the coming year, the company expects cash sales to be $420,000 and credit sales to be $70,000. Determine the Corporation's expected net income for the coming year. a. $27,300 b. $31,850 c. $28,210 d. $43,400

Explanation / Answer

Answer)

Answer is option(c)

Particulars $ Cash sales(1) 420000 (Add)Credit sales(2) 70000 Total sales[(1)+(2)](3) 490000 (Less)Cost of goods sold[sales×60%](4) (294000) Gross income[(3)-(4)](5) 196000 (Less) operating income[sales×30%](6) (147000) (Less) Provision for Bad debts[credit sales×8%](7) (5600) Net operating income before taxes(8) 43400 (Less)Tax[(8)×35%](9) (15190) Expected net income[(8)-(9)] 28210

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