Flip Corporation Operates in Two States, as Indicated Below ​
* Excess Warehouse Space, Seasonal Rental to a Competitor

question 23

Essay

Flip Corporation operates in two states, as indicated below.All goods are manufactured in State A.Determine the sales to be assigned to both states to be used in computing Flip's sales factor for the year.Both states follow the UDITPA and the MTC regulations in this regard. $$\begin{array} { l r r } & \text { State A } & \text { State B } \\\text { Gross sales to purchasers in state } & \$ 420,000 & \$ 360,000 \\\text { Sales returns } & 9,000 & 11,000 \\\text { Discounts allowed } & 21,000 & 31,000 \\\text { Rental income } & 60,000 * & 25,000 * *\end{array}$$ ​
* Excess warehouse space, seasonal rental to a competitor.
** Land held for speculation.

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Definitions:

Average Operating Assets

Refers to the average value of the assets employed in a business's operations over a certain period of time, used to assess operational efficiency and return on investment.

Sales

The revenue generated from goods or services provided by a company to its customers.

Turnover

The total revenues or sales achieved by a company in a specified period, or the rate at which inventory is sold and replaced.

Average Operating Assets

A metric calculated as the average value of the assets involved in generating operating income over a specific period.