An entity has a 50% gross margin, general and administrative expenses of $50, interest expense of $20, and net income of $10 for the year just ended. If the corporate tax rate is 50%, the level of sales revenue for the year just ended was?

Sales revenue was $180.

Explanation: After tax net income ($10) is 50% of income before tax (50% tax deducted). So, income before tax was 10/0.5 = $20.

Gross income is income before tax PLUS operating expenses including interest. So is, 20 + 50 + 20 = $90.

This is 50% of sales. Therefore sales were 90/0.5 = $180 

Net Income = $10

So, Income before tax = $10/ 50% = $20

So, Gross Margin = Income before tax + Interest + G & Admin

 = $20 + $20 + $50 = $90

So, Sales Revenue = Gross Margin / 50% = $180

 Cost of sales = $180 x 50% = $90

In answering this type of questions, you better work out the answer backwards:

($ net income /% income tax rate=$) + $ interest expense + $ G&A expense= $ gross profit (gross margin). Notice that gross profit (sales - cost of goods sold) is equal to gross margin in terms of percentage. Please pay special attention to when gross margin might be more or less than%, for example%. Understanding the breakdown of sales (gross margin as opposed to cost of goods sold or otherwise known as contribution margin in terms of managerial accounting) is of high importance. 

Since gross margin is%, the sales represent the total of the cost + the gross profit. In other words, in order to arrive at the gross margin, we basically multiply sales by%. Mathematically speaking, multiplication is the opposite of the division. Hence, gross profit divided by% =

Normally, a list of options is given, and your job is to apply all of the possible answers to the equation so as to verify your answer. For example, let's say you have three options, of which is one. Now, multiply by% and you get $.5 which falls short of covering the G&M expenses. 

I hope this helps  

The sales revenue is onne hundred sixty dollar.

sales revenue would be $90 less $50 administrative expense less $20= $20 and corporate tax is 50% of this that is $10 so you need to less this that will give you a net income of $10.

answer is $90 sales revenue