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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. A long-term capital gain of $55,000 was realized during the year along with a capital loss of $70,000 1. What is Builtrite’s taxable income? 2. Based on their taxable income, what is Builtrite’s tax liability? 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? 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: 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 had also received common stock dividends of $10,000 from stock owned. What is Builtrite’s new level of retained earnings? $190,000 $170,000 $180,000 $200,000

/in /by

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.  A long-term capital gain of $55,000 was realized during the year along with a capital loss of $70,000

1. What is Builtrite’s taxable income?

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

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?

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:

5. 

  1. (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 had also received common stock dividends of $10,000 from stock owned.  What is Builtrite’s new level of retained earnings?   $190,000$170,000$180,000$200,000
 
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