The Fitness Studio Incs 2012 income statement lists the foll

The Fitness Studio, Inc.’s, 2012 income statement lists the following income and expenses: EBIT = $531,000, interest expense = $62,000, and net income = $437,000.

Calculate the 2012 taxes reported on the income statement.

Solution

As per the format of a general income statement, we calculate net income using the following formula:

Net Income = EBIT – Interest – Taxes

Plugging the values in the formula, we get:

437,000 = 531,000 – 62,000 – Taxes

Taxes = 531,000-62,000-437,000

Taxes = 32,000

Therefore, taxes reported in the income statement would be 32,000.