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Builtrite had sales of $700,000 and COGS of $290,000. In addition, operating expenses were calculated at...

Builtrite had sales of $700,000 and COGS of $290,000. In addition, operating expenses were calculated at 25% of sales. Interest expense was based on $100,000 of bonds outstanding with an interest rate of 7%. 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 $45,000

What is Builtrite's taxable income?

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Answer #1
Particulars Amount Amount
Sales $700,000
Less:
COGS $290,000
Operating Expenses ($700,000*25%) $175,000
Interest ($100,000*7%) $7000 $472,000
Net Profit ($700,000 - $472,000) (A) $228,000
Dividend Received (B) $40,000
Long Term Capital Gain $55,000
Less: Long Term Capital Loss $45,000
Net Capital Gain ($55,000-$45,000) (C) $10,000
Total Taxable Income (A+B+C) $278,000
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