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Khalifa Computers has 3,000 shares of common stock outstanding. The company also has the following amounts...

Khalifa Computers has 3,000 shares of common stock outstanding. The company also has the following amounts in revenue and expense accounts.

Sales Revenue

85,000

General and Administrative Expense

4,500

Interest Expense

5%

Depreciation Expense

4,250

Preferred Stock Dividends

1,200

Selling Expense

4,000

Cost of Goods Sold

37,000

Equity Dividend

1,350

Secured Loan

56000

Calculate:                                                                                                                   

  1. Gross profits.
  2. Operating profits.
  3. Net profits after taxes (assume a 30 percent tax rate).
  4. Calculate the depreciation using MACRS approach for an asset which costs $85,000 and is being depreciated using a 5-year normal recovery period (depreciation rate is as follows: 20%, 32%, 19%, 12%, 12% and 5%). Will the depreciation amount be difference in case of straight line method when the scrap value of the asset is $5,000?

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ekkarill92 answered 1 year ago
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