The Mason Gift Company had sales of $540,000 in the past year, with operating ex

Question

The Mason Gift Company had sales of $540,000 in the past year, with operating

expenses of $82,500 and cost of goods sold of $310,000. Interest expenses

amounted to $15,500, and $15,000 in common stock dividends were received.

Common stock, which had been purchased eight months earlier for $22,000,

was sold for $30,000.

Compute the taxable income of Mason Gifts and its tax liability.

The Mason Gift Company had sales of $540,000 in the past year, with operating expenses of $82,500 and cost of goods sold of $310,000. Interest expenses amounted to $15,500, and $15,000 in common stock dividends were received. Common stock, which had been purchased eight months earlier for $22,000, was sold for $30,000. Compute the taxable income of Mason Gifts and its tax liability.

Explanation / Answer

Taxable income = Revenue - Operating cost - COGS - Interest expense

=540,000 -82,500 -310,000-15,500 = $132,000

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