Given: 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), and still had the $55,000 long-term capital gain stated in the problem, which of the following is correct:

the tax liability would increase by $25,000

taxable income would increase by $40,000

taxable income would not change

taxable income would increase by $25,000

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 $25,000. What is Builtritesnew level of retained earnings?

		$170,000
		$190,000
		$180,000
		$200,000