The Walstore Shoe Market had $1,875,000 of shoe sales and its cost for these shoes was $688,000. In addition, Shoe Market received $5,000 of corporate bond interest and $6,000 interest on State of California bonds. It paid $512,000 in salaries and had $552,000 of other operating expenses. What is Shoe Market’s taxable income? What is its income tax liability?
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Question & Answer: The Walstore Shoe Market had $1,875,000 of shoe sales and its cost for these s…..
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|Computation of Taxable Income|
|Less: Cost of the shoes||(688000)|
|Add: Corporate Bond Interest||5000|
|Less: Operating Expenses||(552000)|
|Note: Interest on State of California Bonds is exempt from tax and the same has been ignored for the purpose of computation of Taxable Income|
|Computation of Income Tax Liability|
|Particulars||Amount ($)||Rate of Tax (%)||Income Tax = (Amount * Rate of Tax)|
|Total Income Tax Liability||33170|