John Has $55,000 Net Earnings from a Sole Proprietorship

question 84

Multiple Choice

John has $55,000 net earnings from a sole proprietorship.John is also employed part-time by a major corporation and is paid $25,000.John's self-employment tax (rounded) for 2015 is

• A)$3,886.
• B)$4,208.
• C)$7,771.
• D)$8,415.

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Definitions:

Accounts Payable

A liability account that records amounts the company owes to suppliers or creditors for purchases or services received on credit.

Physical Inventory Count

A physical inventory count is the process of manually counting all merchandise or stock in a business to verify records and manage inventory levels.

Cost Of Inventory

The total cost incurred to acquire, produce, and place inventory items available for sale, including purchase price, shipping, handling, and storage.

Cost Of Goods Sold

An expense representing the total cost of materials and labor required to produce goods that have been sold in a given period.