Question

Patricia, a professional gambler, had the following income and expenses in her business: Gambling winnings$275,000Expenses Fees paid for illegal information 18,000Travel costs$8,000Office expenses 5,000Supplies 3,000Business long-distance phone charges 1,000Tickets for illegal parking 900How much net income must Patricia report from this business?
A. $239,100.
B. $240,000.
C. $258,000.
D. $0.

Answer 1

Answer:

C. $258,000.

Explanation:

The computation of the net income reported is shown below:

= Gambling winnings - Travel costs - Office expenses - Supplies - Business long-distance phone charges

= $275,000 - $8,000 - $5,000 - $3,000 - $1,000

= $258,000

For computing this we ignored the illegal cost related to the illegal parking and the illegal information