Builtrite had sales of $700,000 and COGS of $280,000. In addition, operating expenses were calculated at 25% of sales. Builtrite also received dividends of $50,000 and paid out common stock dividends of $25,000 to its stockholders. A long-term capital gain of $70,000 was realized during the year along with a capital loss of $50,000 Based on the above information, answer the following 4 questions:

Question 1 What is Builtrites taxable income?

$280,000

$257,000

$242,000

$217,000

Question 2 Based on their taxable income, what is Builtrites tax liability?

$67,880

$77,630

$83,480

$92,450

Question 3 If we add to our problem that Builtrite also had $10,000 in interest expense, how much would this interest expense cost Builtrite after taxes?

$17,000

$12,200

$6,100

$3,900

Question 4 If Builtrite had experienced a long-term capital loss of $30,000 (instead of the $50,000 long-term capital loss stated in the problem), and still had the $70,000 long-term capital gain stated in the problem, which of the following is correct (compared to the original answer):

taxable income would increase by an additional $40,000

taxable income would increase by an additional $20,000

taxable income would increase by an additional $25,000

taxable income would not change

Question 5 (This problem is not related to the above problem) Last year Builtrite had retained earnings of $140,000. This year, Builtrite had true net profits after taxes of $65,000 which includes common stock dividends received of $10,000, and also paid a preferred dividend of $35,000. What is Builtrites new level of retained earnings?

$180,000

$190,000

$200,000

$170,000