11 Chapter Case Study
Sales
LESS:
Gross Profit
LESS:
$156,100
(51,100) *
$105,000
Cost of Goods Sold
Wages
Rent ($250 x 12)
Property Insurance (150 + 450) $2,700 is
$75/month on a 3-year policy. $450 is six
months of current year coverage
$20,870
3,000
600
Depreciation
Interest
Utilities
Food license
Professional fees (200 + 1,100) $600 would be
capitalized and included in the value of the
restaurant to be built.
2,430
450
1,400
400
1,300
Repairs and Maintenance Fine is not allowed as
a deduction on an income tax return.
650
Advertising and Promotion $2,400 is a prepaid
expense and is not deductible on the current
year return.
1,600
Telephone
Supplies
Miscellaneous
Taxable tax Income before specific deduction
Less:
Specific deduction
U B T IUnrelated Business Taxable Income
480
1,300
520
Federal Income Tax
Less:
Credits and payments
Taxes Owed at the time of filing
12250 **
(10000)
$2,250
* Cost of Goods Sold
FIFO
LIFO
Beginning Inventory
Add: Purchases
Goods available
Less: Ending Inventory
$12,000
52,000
$64,000
(14,000)
$11,200
52,000
$63,200
(12,100)
Cost of Goods Sold
$50,000
$51,100
@
@
15%
25%
** Tax Calculation
$50,000
19,000
Federal Income Tax
(35000)
70000
(1000)
69000
=
=
$7,500
4,750
$12,250