QUIZ-Corporate Taxes and and Financial Statements
Builtrite had sales of $700,000 and COGS of $280,000.
In addition, operating
expenses were calculated at 25% of sales.
Builtrite also received dividends of
$40,000 and paid out common stock dividends of $25,000 to its stockholders.
long-term capital gain of $55,000 was realized during the year along with a capital
loss of $70,000
Based on the above information, answer the following 4 questions:
Question 1
What is Builtrite’s taxable income?
A

Question 2
Based on their taxable income, what is Builtrite’s tax liability?

Question 3
If we add to our problem that Builtrite also had $20,000 in interest expense, how
much would this interest expense cost Builtrite after taxes?

Question 4
If Builtrite had experienced a long-term capital loss of $30,000 instead of the
$70,000 long-term capital loss stated in the problem, (in addition to the $55,000
long-term capital gain) which of the following is correct:

Question 5
(This problem is not related to the above problem) Last year Builtrite had retained
earnings of $140,000.
This year, Builtrite had net profits after taxes of $65,000 and
paid a preferred dividend of $25,000.
Builtrite also received common stock
dividends of $10,000 from stock owned.
What is Builtrite’s new level of retained
earnings?

Quiz-Time Value of Money
Question 1
Barry Cuda would like to save $175,000 over the next 20 years. He will assume his
account will earn 7% annually.
If Barry decides to make a single deposit into his
account,
how much would he need to deposit today?

Question 2
Ella Funt would like to set up her retirement account that will begin in 40 years.
To
play it safe, she wants to assume that she will live forever and she will withdraw
$160,000 annually. Assuming her account will earn 10% interest during the next 40
years and 5% interest afterwards forever, how much will Ella need to save annually
over the next 40 years to fund her retirement account?