M-1 Sample Problem a

M-1 Sample Problem a - 455,685 Income Tax Provision - State...

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The following is the income statement for the corporation for 2008. Gross Sales 4,532,000 Sales Returns and Allowances 125,000 Net Sales 4,407,000 Cost of Goods Sold 2,175,000 Gross Profit 2,232,000 Rental Income on Land 25,000 NOTE 1 Interest Income - Notes Receivable 6,000 Interst Income - Treasury 21,000 Interest Income - PA Municipal Bonds 18,000 Total Income 2,302,000 Premiums on Term Life Insurance for Officers 16,000 Compensation of Officers 275,000 Salaries and Wages 158,000 Repairs 14,000 Bad Debts 9,500 NOTE 2 Rental Expenses 18,000 Taxes (payroll and real estate taxes) 34,500 Interst Expense - loan for purchase of Treasury Bonds 3,000 Interest Expense 40,500 Charitable Contributions 46,500 Depreciation 25,000 NOTE 3 Advertising 15,000 Lobbying Expenses for U.S. Congress 4,000 Office Expense 24,000 NOTE 4 Legal Fees 85,000 NOTE 5 Loss on sale of stock held for investement 16,000 784,000 Net Income before Taxes 1,518,000 Income Tax Provision - Federal
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Unformatted text preview: 455,685 Income Tax Provision - State 189,000 Total Taxes 644,685 Net Income after Taxes 873,315 Note 1 -New this year was rent received from lease of land for a parking lot. The total amound was $35,000. The following is the breakdown: 2008 Rent(Received Jan-Dec 2008) 25,000 2009 Rent (Prepaid rent received in December of 2008) 5,000 Security Deposity 5,000 35,000 Note 2 - The reserve method was used for bad debts. The company specifically wrote - off $6,000 as uncollectible this year. Note 3 - Tax Depreciation for 2008 was $23,200 Note 4 - The office expense includes $8,500 of client entertainment expenses and $5,000 in country club dues. Note 5 - The legal fees consisted of $25,000 for 2008 billing from the legal office of Smith and Sony. The remaining amount is a reserve established for a legal dispute with a retiree over medical insurance premiums that the company stopped paying....
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This note was uploaded on 08/31/2009 for the course DRXL 100 taught by Professor All during the Spring '09 term at Drexel.

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