Karl works at Moe's grocery. This year Karl was paid $43,000 in salary, but he was allowed to purchase his groceries at 10 percent below Moe's cost. This year Karl spent $3,600 to purchase groceries, costing Moe $4,000. The groceries were worth $6,000. What amount must Karl include in his gross income?

Question

Quizplus · Accepted Answer

Karl's discount on groceries is considered a form of compensation or income, so it must be included in his gross income. The amount of his discount is 10% of $4,000, which is $400. Therefore, his total compensation is $43,000 + $400 = $43,400.

Karl Works at Moe's Grocery