In the current year, ABC Corporation had the following items of income, expense, gains, and losses: What is taxable income for the year?

Question

In the current year, ABC Corporation had the following items of income, expense, gains, and losses:  What is taxable income for the year?

Quizplus · Accepted Answer

To calculate taxable income, we need to start with the company's gross income and then subtract all expenses and deductions.

Gross income: 
Sales revenue: $300,000 
Interest income: $10,000 
Total gross income: $310,000

Expenses: 
Cost of goods sold: $140,000 
Wages and salaries: $20,000 
Depreciation: $10,000 
Rent expense: $6,000 
Other operating expenses: $5,000 
Interest expense: $4,000 
Total expenses: $185,000

Gains: 
Sale of equipment: $20,000

Losses: 
Write-down of inventory: $1,000

To calculate taxable income: 
Gross income - expenses +/- gains or losses = taxable income 
$310,000 - $185,000 + $20,000 - $1,000 = $144,000

Therefore, the correct answer is choice C.

In the Current Year, ABC Corporation Had the Following Items