Question

Hint the answer is not 144500 or 303345

Flip's Pizzeria Inc. has the following financial items for the current year: Advertising Expenses $50,000 Cost of Goods Sold $400,000 Other Operating Expenses $395,000 Sales $2,340,000 Cost of Equipment purchased during the year (10 year estimate useful life, O salvage value) $505,000 Calculate Flip's taxable liability for the current year. Answer is complete but not entirely correct В C A 1 Taxable Liability = 303,345 2 3 4 5 6 7 8 10

Answer 1

Taxable income is the income which is calculated by adding all the income earned by an entity after deduction of all the expenses and deduction.

FLIP'S PIZZERIA INC.
Advertising Expenses	$50,000
Cost OfGoods sold	$400,000
Depreciation (505000/10)	$50,500
other operating expenses	$395,000
sales	$2,340,000
Calculation of Gross profit
Gross Profit = Sales - cost of goods sold
= $2,340,000 - $400,000	$1,940,000
Calculation of operating income
Operating Income = Gross Profit - (Advertisement expense+ Depreciation of Equipment + other Operating Expenses)
=$1,940,000 - ($50,000+$50,500+$395,000)
	$1,444,500
Calculation of taxable income
Taxable Income = Net operating income + other didvidend income (if any)
	$1,444,500
Since there is no other income, the Net operating income is the Taxable income