How to Calculate Net Income for Dog Groomers Company
What is the total revenue of Dog Groomers Company?
A. $27,000
What are the total expenses incurred by the company?
A. $19,000 for service cost; $6,000 for income tax and interest expenses
What is the net income of Dog Groomers Company?
Total Revenue:
The total revenue of Dog Groomers Company is $27,000.
Total Expenses:
The company incurred $19,000 for service cost and $6,000 for income tax and interest expenses.
Net Income:
The net income of Dog Groomers Company is $2,000.
Calculating net income is crucial for understanding a company's profitability. In the case of Dog Groomers Company, the total revenue from services sold was $27,000. This revenue amount includes all sales made by the company.
On the other hand, the company had various expenses to cover. The service cost amounted to $19,000, which represents the direct costs associated with providing the services. Additionally, the company incurred $6,000 in income tax and interest expenses, which are part of the overall expenses that need to be accounted for.
To determine the net income, we subtract the total expenses from the total revenue. In this case, $27,000 (total revenue) - $19,000 (service cost) - $6,000 (income tax and interest expenses) equals $2,000. This $2,000 represents the net income of Dog Groomers Company after accounting for all costs and expenses.