Using the following information, compute NET INCOME. Cost of Goods Sold $ 6,000
Interest Expense 1,100
Selling and Administrative Expense 750
Cash 400
Sales 10,000
Accrued Wages Payable 250
Dividends 700
Retained Earnings (beginning) 1,000
Income Tax Expense 1,200

a. $1,350
b. $700
c. $1,700
d. $950
e. $1,950

d. $950

Explanation:

Calculation to determine the NET INCOME

Sales $ 10,000.00

Cost of goods sold$ 6,000.00

Gross margin$ 4,000.00

($10,000-$6,000)

Selling and administrative expenses$ 750.00

Net operating income$ 3,250.00

($4,000-$750)

Interest expense$ 1,100.00

Net income before taxes$ 2,150.00

($3,250-$1,100)

Income taxes $ 1,200.00

Net income$ 950.00

($2,150-$1,200)

Therefore the NET INCOME will be $950

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