Alpaca Corporation had revenues of $300,000 in its first year of operations. The company has...
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Alpaca Corporation had revenues of $300,000 in its first year of operations. The company has not collected on $18,200 of its sales and still owes $25,700 on $80,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13,000 in salaries. Owners invested $19,000 in the business and $19,000 was borrowed on a five-year note. The company paid $3,200 in interest that was the amount owed for the year, and paid $6,200 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%. Show your computations.
1) Compute net income for the first year for Alpaca Corporation.
A) $220,000
B) $131,560
C) $200,700
D) $120,420
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