The Howard Corporation is considering expanding sales by $40,000 by selling on credit. The Corporation's...
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The Howard Corporation is considering expanding sales by $40,000 by selling on credit. The Corporation's cash sales averaged $200,000 per year for the last few years. Its cost of goods sold was approximately 50% of sales, its operating expenses were 20% of sales, and its income taxes expense averaged 35% of income before taxes. The company predicts that its cost and expense percentages will remain the same, but only 95% of the credit sales will be able to be collected. For the coming year, the company expects cash sales to be $220,000 and credit sales to be $40,000.
Determine the Corporation's expected net income for the coming year.
| a. | $42,250 | |
| b. | $49,400 | |
| c. | $50,700 | |
| d. | $52,000 |
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