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    Net Income of G+ Company

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    G+ Company is a division of GHI Company. This data pertains to G+ division. Sales amounted to $800,000. Cost of sales is 60% of sales. Other direct expenses of the division amount to 15% of sales. Allocated expenses are $90,000. Interest amounts to 10% of long-term debt. Taxes are 30% of income. Total assets are $500,000 with 10% representing short-term and 40% representing long-term debt.

    How much is the division's net income?

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    Solution Preview

    Gross profit = Sales * (1 - share of cost - share of direct expenses) - allocated ...

    Solution Summary

    This solution determines the net income of the division by calculating the gross profit and earnings before tax. All steps are shown with full formulas.