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In: Accounting

Presented below are the income and expenses of G&G Corporation, computed according to generally accepted accounting...

Presented below are the income and expenses of G&G Corporation, computed according to generally accepted accounting principles. Compute taxable income. No financial statements are given.

G & G Corporation
Receipts and Expenses
2017
Income
Sales (net)     500,000.00
Beginning inventory 85000
Purchases 205000
Ending inventory 80000
LT Gain on the sale of Apple stock        10,000.00
LT loss on the sale of Macy's stock        12,000.00
Dividends received from Altria (<20% ownership)           7,000.00
Interest from Oklahoma Turnpike Authority bonds           8,000.00
Interest from Fed Ex bonds        10,000.00
Expenses
Wages and salaries     110,000.00
Repairs and maintenance           2,500.00
1 Bad debt expense           7,500.00
2 Depreciation           2,000.00
Charitable contributions        40,000.00
Fines           2,000.00
Meals and entertainment           1,000.00
Notes
1. The balance in allowance for bad debts account was $4,000 on 1/1/17 and $6,500 on 12/31/17.
2. Depreciation on a $20,000 asset, placed in service on 6/1/17.  The corporation made a Section
179 election for this asset.

Solutions

Expert Solution

Income Statement of GG Corporation
Particulars Amount Particulars Amount
Op Stock      85,000.00 Sales 5,00,000.00
Purchase 2,05,000.00
Closing Stock      80,000.00
GP 2,90,000.00
5,80,000.00 5,80,000.00
Wages and salaries 1,10,000.00 GP 2,90,000.00
Repairs and maintenance        2,500.00
Bad debt expense
Depreciation as per Co Act        2,000.00
Charitable Cont      40,000.00
Fines        2,000.00
Meals        1,000.00
Net Profit 1,32,500.00
2,90,000.00 2,90,000.00
Caculatio of Net Taxable Income
Net Profit as per Income Statement 1,32,500.00
Add: Exp Disallowed
Charitable Cont      40,000.00
Depreciation as per Co Act        2,000.00
Dep as Income Tax    -20,000.00
1,54,500.00
Capital Gain
LT Gain on Apple Stock      10,000.00
LT Loss on Shares      12,000.00
Exempt
Other Sources
Dividend From Company (Exempt)        7,000.00
Interest from Oklahoma Turnpike Authority bonds        8,000.00
Interest from Fed Ex bonds      10,000.00
Net Taxable Income 1,82,500.00

ekkarill92 answered 1 year ago
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