TaxProblemsA-D.pdf - HOFFMAN FIN 300 Question A Builtrite...

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HOFFMAN FIN 300 Question A Builtrite had sales of $36,000,000 last year. Cost of goods sold were calculated at 65% of sales. Builtrite’s operating expenses were $6,000,000 which included depreciation expense. Bonds with a total par value of $12,000,000 were outstanding and had a 9% coupon rate. Builtrite received $200,000 in dividends from stock owned and paid out $600,000 in dividends to its preferred stockholders. Builtrite sold stock that it had purchased in 2008 and realized a $350,000 capital gain. a) Calculate Builtrite’s taxable income and tax liability. Question B Builtrite had annual sales of $21,000,000 with the following information: Dividend income was $200,000 Interest expense was based on the total par value of $10,000,000 in bonds with a 7% coupon rate Operating expenses were $1,800,000 Depreciation expense was an additional $280,000 COGS were calculated at 60% of sales Preferred stock dividends of $100,000 were paid Common stock dividends of $300,000 were paid A long-term capital gain of $500,000 was realized A short-term capital loss of $600,000 was realized What are Builtrite's retained earnings for the year?

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