Question
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 $40,000
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 $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 $70,000
1.What is Builtrites taxable income?
2.Based on their taxable income, what is Builtrites tax liability?
3.If we add to our problem that Builtrite also had $20,000 in interest expense, how much would this interest expense cost Builtrite after taxes?
4. If Builtrite had experienced a long-term capital loss of $30,000 instead of the $70,000 long-term capital loss stated in the problem, (in addition to the $55,000 long-term capital gain) which of the following is correct:
5.
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(This problem is not related to the above problem) Last yearBuiltritehad retained earnings of $140,000. This year,Builtritehadnet profits after taxesof $65,000 and paid a preferred dividend of $25,000.Builtritehadalso received common stock dividends of $10,000 from stock owned. What isBuiltritesnew level of retained earnings?
$190,000
$170,000
$180,000
$200,000
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