Question

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?

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