Given: Builtrite had sales of $700,000 and COGS of $280,000. In addition, operat

Question

Given: Builtrite had sales of $700,000 and COGS of $280,000. In addition, operating expenses were calculated at 25% of sales. Builtrite also received dividends of $40,000 and paid out common stock dividends of $25,000 to its stockholders. A long-term capital gain of $55,000 was realized during the year along with a capital loss of $70,000

1.What is Builtrite’s taxable income?

2.Based on their taxable income, what is Builtrite’s tax liability

3. If we add to our problem that Builtrite also had $20,000 in interest expense, how much would this interest expense cost Builtrite after taxes?

4. If Builtrite had experienced a long-term capital loss of $30,000 (instead of the $70,000 long-term capital loss stated in the problem), and still had the $55,000 long-term capital gain stated in the problem, which of the following is correct:

the tax liability would increase by $25,000

taxable income would increase by $40,000

taxable income would not change

taxable income would increase by $25,000

5. This problem is not related to the above problem) Last year Builtrite had retained earnings of $140,000. This year, Builtrite had true net profits after taxes of $65,000 which includes common stock dividends received of $10,000, and also paid a preferred dividend of $25,000. What is Builtrite’snew level of retained earnings?   

$170,000

$190,000

$180,000

$200,000

Given: Builtrite had sales of $700,000 and COGS of $280,000. In addition, operating expenses were calculated at 25% of sales. Builtrite also received dividends of $40,000 and paid out common stock dividends of $25,000 to its stockholders. A long-term capital gain of $55,000 was realized during the year along with a capital loss of $70,000

Explanation / Answer

Question 1

What is Builtrite's assessable income?

Correct Answer:

$257,000

Question 2

Based on their assessable compensation, what is Builtrite's obligation liability?

Correct Answer:

$83,480

Question 3

If we add to our worry that Builtrite similarly had $20,000 in premium cost, what sum would this superior cost Builtrite after taxes?

Correct Answer:

$12,200

Question 4

If Builtrite had experienced a whole deal capital loss of $30,000 as opposed to the $70,000 whole deal capital hardship communicated in the issue, (despite the $55,000 whole deal capital get) which of the going with is correct:

Correct Answer:

assessable wage would increase by $25,000Question 5(This issue isn't related to the above issue) Last year Builtrite had held benefit of $140,000. This year, Builtrite had net advantages after obligations of $65,000 and paid a favored benefit of $25,000. Builtrite in like manner got essential stock benefits of $10,000 from stock had. What is Builtrite's new level of held benefit?

Change Answer:

$180,00

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