Nikki works for the Shine Company, a retailer of upscale jewelry. How much taxable income does Nikki recognize under the following scenarios?

a. Nikki buys a diamond ring from Shine Company for $10,000 (normal sales price,

$14,000; Shine Company’s gross profit percentage is 40 percent).

b. Nikki receives a 25 percent discount on jewelry restoration services offered by Shine Company. This year, Nikki had Shine Company repair a set of antique earrings

(normal repair cost $500; discounted price

$375).