How much is the depreciation expense for a small business with the following information: Sales=$500,000, Net income=$61,250, Tax liability=$13,750, Cost of goods sold=$200,000, Administrative expenses=$100,000, Interest expense=$30,000

Finance Sep 09, 2020

How much is the depreciation expense for a small business with the following information: Sales=$500,000, Net income=$61,250, Tax liability=$13,750, Cost of goods sold=$200,000, Administrative expenses=$100,000, Interest expense=$30,000.

Expert Solution

Computation of Depreciation Expenses:

Net Income = Sales - Cost of Goods Sold - Administrative Expenses - Interest Expenses - Tax Liability

61,250 = 500,000 - 200,000 - 100,000 - 30,000 - Depreciation Expenses - 13,750

61,250 = 156,250 - Depreciation Expenses

Depreciation Expenses = 156,250 - 61,250 = 95,000

So, Depreciation Expenses is $95,000.

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