Margaret started her own business in the current year and will report a profit for her first year. Her results of operations are as follows:

Gross income

$45,000

Travel

1,000

Contribution to Presidential Election Campaign

100

Transportation 5,427 miles, using standard mileage method

?

Entertainment in total

4,200

Nine gifts at $50 each

450

Rent and utilities for apartment in total (25% is used for a home office)

10,500

What is the net income Margaret should show on her Schedule C? Show the calculation of her taxable business income.

LO 3.2

Lawrence owns a small candy store that sells one type of candy. His beginning inventory of candy was made up of 10,000 boxes costing $1.50 per box ($15,000), and he made the following purchases of candy during the year:

March 1

10,000 boxes at $1.60

$16,000

August 15

20,000 boxes at $1.70

34,000

November 20

10,000 boxes at $1.80

18,000

At the end of the year, Lawrences inventory consisted of 15,000 boxes of candy.

Calculate Lawrences ending inventory and cost of goods sold using the FIFO inventory valuation method.

Ending inventory

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Cost of goods sold

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Calculate Lawrences ending inventory and cost of goods sold using the LIFO inventory valuation method.

Ending inventory

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Cost of goods sold

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