a. What amount is Jarvie required to include in taxable income from these purchases? b. What amount of deductions is Bad Dog allowed to claim from these transactions?

Required information [The following information applies to the questions displayed below.] Jarvie loves to bike. In fact, he has always turned down better-paying jobs to work in bicycle shops where he gets an employee discount. At Jarvie's current shop, Bad Dog Cycles, each employee is allowed to purchase four bicycles a year at a discount. Bad Dog has an average gross profit percentage on bicycles of 25 percent. During the current year, Jarvie bought the following bikes: Description Specialized road bike Rocky Mountain mountain bike Trek road bike Yeti mountain bike Retail Price $ 3,900 4,500 3,400 5,900 Cost $ 2,500 3,900 2,100 5,240 Employee Price $ 2,730 3,600 2,380 4,720 a. What amount is Jarvie required to include in taxable income from these purchases? Amount to be included