Answer:
The correct answer is C that is $354,000
Explanation:
The present earnings and the profit for the year 20X3 of the Corporation is computed as:
Present earnings and the profit for the year 20X3 of the Corporation = Taxable Income - Federal income tax - Entertainment expense + Deferred gain on sale of installment + Tax exempt income
Where
Taxable Income is $500,000
Federal income tax is $17,000
Entertainment expense is $2,000
Deferred gain on sale of installment is $25,000
Tax exempt income is $1,000
Putting the values in the above formula:
= $500,000 - $170,000 - $2,000 + $25,000 + $1,000
= $354,000.
