Calvin Corporation,has the Following Items of Income and Expense for the Current

question 10

Essay

Calvin Corporation,has the following items of income and expense for the current year.Calculate (a)Calvin's taxable income and (b)income tax liability.
$\begin{array}{lr} \text { Sales revenue } &\$ 500,000 \\ \text { Cost of goods sold } &\underline{360,000}\\ \text { Gross profit } &{\$ 140,000} \\\\ \text { Other revenue: } &\\ \text {Dividends (less than 2 \% owner ship) } &\$ 5,000 \\ \text { Interest received from municipal bonds } &30,000 \\\\ \text { Expenses: } &\\ \text {Utilities } &\$ 25,000 \\ \text {Insurance } &15,000 \\ \text {Meals and entertainment } &60,000 \\ \text { Charitable contributions } &10,000 \\ \text { Net operating loss (from the previous year) } &\$ 60,000\end{array}$