Question
Shamberly Corp. is a calendar year, accrual basis corporation that has been in business for 30 years. The following income and expenses appear on Shamberly's
Shamberly Corp. is a calendar year, accrual basis corporation that has been in business for 30 years. The following income and expenses appear on Shamberly's records for the year ended December 31, Year 3.
1. Calculate Shamberly's taxable income (or net operating loss) for the year. (Amounts to be deducted should be indicated by a minus sign.)
2. Shamberly Corp is contemplating making a charitable contribution that would be deductible in Year 3. It would like to give the minimum amount necessary to maximize its tax benefit from the contribution deduction for Year 3. First, calculate what that amount would be: (Amounts to be deducted should be indicated by a minus sign.)
Wrong answers are shown in the photos.
Revenues and Gains | ||
Gross sales | $ | 1,000,000 |
Dividends: | ||
10%-owned domestic corporation ABC Corp. | 400,000 | |
Interest | ||
California State bonds | 15,000 | |
U.S. treasury bonds | 35,000 | |
Gain on sale of ABC stock | 95,000 | |
Key person life insurance proceeds | 300,000 | |
Total | $ | 1,845,000 |
Costs and Expenses | ||
Cost of goods sold | 650,000 | |
Salaries and wages | 420,000 | |
Depreciation | 220,000 | |
Meals expense | 20,000 | |
Key person life insurance premiums | 15,000 | |
State income taxes | 10,000 | |
Federal income taxes | 45,000 | |
Rent, Utilities, etc. | 200,000 | |
Other expenses | 50,000 | |
Total | 1,630,000 | |
Net Income | $ | 215 000 |
Shamberly Corp. is a calendar year, accrual basis corporation that has been in business f expenses appear on Shamberly's records for the year ended December 31, Year 3. $ 1,000,000 400,000 Revenues and Gains Gross sales Dividends: 10%-owned domestic corporation ABC Corp. Interest California State bonds U.S. treasury bonds Gain on sale of ABC stock Key person life insurance proceeds Total 15,000 35,000 95,000 300,000 $ 1,845,000 Costs and Expenses Cost of goods sold Salaries and wages Depreciation Meals expense Key person life insurance premiums State income taxes Federal income taxes Rent, Utilities, etc. Other expenses Total Net Income 650,000 420,000 220,000 20,000 15,000 10,000 45,000 200,000 50,000 1,630,000 215 000 $ 1. Calculate Shamberly's taxable income (or net operating loss) for the year sign.) Amount $ 1,000,000 400,000 $ 15,000 X 35,000 95,000 $ 300,000 X $ 1,845,000 Revenues and Gains Gross sales Dividends: 10%-owned domestic corporation ABC Corp. Interest on California State bonds Interest on U.S. treasury bonds Gain on sale of ABC stock Key person life insurance proceeds Total Costs and Expenses Cost of goods sold Salaries and wages Depreciation Meals expense Key person life insurance premiums State income taxes Federal income taxes Rent, Utilities, etc. 650,000 420,000 220,000 20,000 X 15,000 X 10,000 45,000 X 200,000 Other expenses Total 50,000 $ 1,630,000 215,000 Taxable income before DRD 07 Shamberly Corp. is a calendar year, accrual basis corporation that has been in business f expenses appear on Shamberly's records for the year ended December 31, Year 3. $ 1,000,000 400,000 Revenues and Gains Gross sales Dividends: 10%-owned domestic corporation ABC Corp. Interest California State bonds U.S. treasury bonds Gain on sale of ABC stock Key person life insurance proceeds Total 15,000 35,000 95,000 300,000 $ 1,845,000 Costs and Expenses Cost of goods sold Salaries and wages Depreciation Meals expense Key person life insurance premiums State income taxes Federal income taxes Rent, Utilities, etc. Other expenses Total Net Income 650,000 420,000 220,000 20,000 15,000 10,000 45,000 200,000 50,000 1,630,000 215 000 $ 1. Calculate Shamberly's taxable income (or net operating loss) for the year sign.) Amount $ 1,000,000 400,000 $ 15,000 X 35,000 95,000 $ 300,000 X $ 1,845,000 Revenues and Gains Gross sales Dividends: 10%-owned domestic corporation ABC Corp. Interest on California State bonds Interest on U.S. treasury bonds Gain on sale of ABC stock Key person life insurance proceeds Total Costs and Expenses Cost of goods sold Salaries and wages Depreciation Meals expense Key person life insurance premiums State income taxes Federal income taxes Rent, Utilities, etc. 650,000 420,000 220,000 20,000 X 15,000 X 10,000 45,000 X 200,000 Other expenses Total 50,000 $ 1,630,000 215,000 Taxable income before DRD 07
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