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X is a calendar year, regular corporation with the following information reflected on its profit and loss statement, with the statement audited by your firm.
X is a calendar year, regular corporation with the following information reflected on its profit and loss statement, with the statement audited by your firm. Your manager has given you the statement and asked you to prepare a workpaper computing taxable income and to show all book/tax differences used to compute that number.
P&L | |
Revenue | $1,000,000 |
Cost of Revenue | 725,000 |
Gross Margin | 275,000 |
Operating Expenses | |
Wages | 120,000 |
Payroll taxes | 90,000 |
Bad debt expense | 2,000 |
Officer life insurance | 600 |
Repairs & maintenance | 5,000 |
Depreciation | 10,000 |
Office expense | 5,010 |
Uniforms | 600 |
Rent | 12,000 |
Travel | 1,000 |
Equipment | 750 |
Utilities | 9,000 |
Meals | 600 |
Total Operating Expenses | 256,560 |
Other Income (Expense) | |
Dividends from 60% owned company | 7,000 |
Loss upon asset disposal-book | (500) |
Municipal interest income | 350 |
Total Other Income (Expense) | 6,850 |
Net Book Income | $25,290 |
Special notes:
- Net operating loss carryforward of $10,000
- Tax depreciation is $15,000
- Bad debts written off of $1200
- Tax basis of asset disposed of was $500 greater than book asset basis.
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