How to Calculate Net Income: A Step-by-Step Guide

To calculate the net income, we need to subtract all the expenses (excluding taxes) from the sales revenue.

Net Income = Sales - Costs - Depreciation Expense - Interest Expense

Net Income = $642,000 - $330,000 - $75,000 - $40,000

Net Income = $197,000

However, we also need to consider the tax expense. To calculate the net income after taxes, we need to subtract the tax expense from the calculated net income.

Tax Expense = Net Income * Tax Rate

Tax Expense = $197,000 * 0.22

Tax Expense = $43,340

Net Income after Taxes = Net Income - Tax Expense

Net Income after Taxes = $197,000 - $43,340

Net Income after Taxes = $153,660

Therefore, the net income for this firm is $153,660.