Question

Expenses from operations Quying Dividends 700,000 950.000 200.000 Problem 3 Zeta corporation have the following income and deductions for the current year Sales 60,000 Cost of sales 30,000 Other operating expenses Dividends (from 5% owned corporation) 60,000 Zeta made charitable contribution of 60,000 to a qualified charity. Calculate Charitable deduction for the current year and carryover if any. 40,000

Answer 1

3.

Income Statement
Account Title	Amount
Sales	$       60,000
Cost of sales	$       30,000
Profit & Loss	$       30,000
Other operating expenceses	$       40,000
Operating profit	$      -10,000
Charitable deductions	$       30,000
Net Profit	$ 20,000

*Profit & Loss = Sale - cost of sales.

*Operating profit & Loss = Profit - Operating expenses.

*Net profit = Operating expenses - charitable deductions.

*Charitable deductions = @50% of revenue.

Net profit = 20,000

Dividents = 60,000@5% = 3,000.

Retained earning = Net profit - Dividents = 20,000 - 3,000 = 17,000