Question

Flip's Pizzeria Inc. has the following financial items for the current year: Advertising Expenses $45,000 Cost of Goods Sold $390,000 Other Operating Expenses $305,000 Sales $2,085,000 Cost of Equipment purchased during the year (10 year estimate useful life, O salvage value) $375,000 Calculate Flip's taxable liability for the current year. А в с To E 2 Taxable Liability =

Answer 1

Part 1

Sales	2085000
Less: cost of goods sold	(390000)
Gross profit	1695000
Less: advertising expense	(45000)
Other operating expenses	(305000)
Taxable income	1345000
Tax rate	21%
Tax liability	$282450

Part 2

Adjusted taxable income before interest	6600000
Add: interest income	55000
Less: business interest expense	(150000)
Taxable income	6505000
Tax rate	21%
Tax liability	$1366050