SHOW PROCEDURE PLEASE Last year, California Sushi and Such (CSS) had sales of $6

Question

SHOW PROCEDURE PLEASE

Last year, California Sushi and Such (CSS) had sales of $65 million. The firm's operating expenses amounted to $20 million and costs of goods sold totaled $15 million. In addition, CSS received $80,000 in dividend income, and paid $300,000 in dividends to its stockholders. CSS has $25 million in bonds outstanding with an annual interest payment of 9%. The firm also had $6 million in depreciation expense, and sold land for $3.5 million that had been purchased for $2.5 million several years earlier. What is the firm's tax liability? $5,040,000 o $4,794,300 $4,785,900 $4,575,900 $4,769,100

Explanation / Answer

Sales 65000000 Less- cost of goods sold 15000000 Gross profit 50000000 Less- Operating expense 20000000 Operating Income 30000000 Other taxable income and expenses Interst exepnse 2250000 Depreciation 6000000 Add- Dividend income     80000 Less- 70% exclusion         56000 24000 Gain on land sale: Selling price 3500000 Cost 2500000 1000000 Net Taxable Income 22774000 Tax liability 4782540

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