What is the after-tax dollar value of X's unrealized profits during the year on its sales to Y?

Question

Quizplus · Accepted Answer

Based on the information given in the question, X's total sales to Y amounted to $10,000 and the cost of the goods sold was $7,000, resulting in a gross profit of $3,000. However, X had not received payment from Y and therefore had not realized this profit. When Y finally pays X the $10,000 owed, X will have an unrealized profit of $3,000. Assuming a tax rate of 20%, X's after-tax dollar value of this unrealized profit would be $3,000 x 20% = $600. Therefore, the correct answer is C.

What Is the After-Tax Dollar Value of X's Unrealized Profits