Builtrite had sales of $900,000 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

a. What is Builtrites taxable income? b. Based on their taxable income, what is Builtrites tax liability? c. If we add to our problem that Builtrite also had $30,000 in interest expense, how much would this interest expense cost Builtrite after taxes? d. Last year Builtrite had retained earnings of $140,000. This year, Builtrite had true net profits after taxes of $75,000 which includes common stock dividends received of $10,000. Builtrite also paid a preferred dividend of $35,000. What is Builtrites new level of retained earnings?

Corporate Tax Rate Schedule Taxable Income $0 $50,000 50,001 75,000 75,001 - 100,000 100,001 - 335,000 335,001 - 10,000,000 10,000,001 - 15,000,000 15,000,001 - 18,333,333 More than 18,333,333 Tax $0 7,500 13,750 22,250 113,900 3,400,000 5,150,000 6,416,667 Plus 15% 25% 34% 39% 34% 35% 38% 35% Amount Over $0 $50,000 $75,000 $100,000 $335,000 $10,000,000 $15,000,000 $18,333,333 Corporate Tax Rate Schedule Taxable Income $0 $50,000 50,001 75,000 75,001 - 100,000 100,001 - 335,000 335,001 - 10,000,000 10,000,001 - 15,000,000 15,000,001 - 18,333,333 More than 18,333,333 Tax $0 7,500 13,750 22,250 113,900 3,400,000 5,150,000 6,416,667 Plus 15% 25% 34% 39% 34% 35% 38% 35% Amount Over $0 $50,000 $75,000 $100,000 $335,000 $10,000,000 $15,000,000 $18,333,333