Question

Flip's Pizzeria Inc. has the following financial items for the current year: Advertising Expenses $50,000 Cost of Goods Sold $660,000 Other Operating Expenses $390,000 Sales $1,830,000 Wages and Salaries $520,000 Capital Gain $15,000 Calculate Flip's taxable income for the current year.

Answer 1

Answer:

Flip's taxable income for the current year is $2,10,000.

Explanation:

Given information:

Advertising Expenses = $50,000

Cost of Goods Sold = $660,000

Other Operating Expenses = $390,000

Sales = $1,830,000

Wages and Salaries = $520,000

Capital Gain = $15,000

The formula for taxable income is

Taxable income for corporation = Gross Sales - cost of goods sold - operating expense - Interest expense - Tax deduction/ credit

Where,

Operating expense = Advertising Expenses + Wages and Salaries + Other Operating Expenses

Using this formula we get

$\text{Taxable income for corporation}=1830000-660000-(390000+520000+50000)$

$\text{Taxable income for corporation}=210000$

Therefore, Flip's taxable income for the current year is $2,10,000.