Presented below are the income and expenses of G&G Corporation, computed accordi

Question

Presented below are the income and expenses of G&G Corporation, computed according to generally accepted accounting principles. Compute taxable income. No financial statements are given.

G & G Corporation Receipts and Expenses 2017 Income Sales (net)     500,000.00 Beginning inventory 85000 Purchases 205000 Ending inventory 80000 LT Gain on the sale of Apple stock        10,000.00 LT loss on the sale of Macy's stock        12,000.00 Dividends received from Altria (<20% ownership)           7,000.00 Interest from Oklahoma Turnpike Authority bonds           8,000.00 Interest from Fed Ex bonds        10,000.00 Expenses Wages and salaries     110,000.00 Repairs and maintenance           2,500.00 1 Bad debt expense           7,500.00 2 Depreciation           2,000.00 Charitable contributions        40,000.00 Fines           2,000.00 Meals and entertainment           1,000.00 Notes 1. The balance in allowance for bad debts account was $4,000 on 1/1/17 and $6,500 on 12/31/17. 2. Depreciation on a $20,000 asset, placed in service on 6/1/17.  The corporation made a Section 179 election for this asset.

Explanation / Answer

Income Statement of GG Corporation Particulars Amount Particulars Amount Op Stock      85,000.00 Sales 5,00,000.00 Purchase 2,05,000.00 Closing Stock      80,000.00 GP 2,90,000.00 5,80,000.00 5,80,000.00 Wages and salaries 1,10,000.00 GP 2,90,000.00 Repairs and maintenance        2,500.00 Bad debt expense Depreciation as per Co Act        2,000.00 Charitable Cont      40,000.00 Fines        2,000.00 Meals        1,000.00 Net Profit 1,32,500.00 2,90,000.00 2,90,000.00 Caculatio of Net Taxable Income Net Profit as per Income Statement 1,32,500.00 Add: Exp Disallowed Charitable Cont      40,000.00 Depreciation as per Co Act        2,000.00 Dep as Income Tax    -20,000.00 1,54,500.00 Capital Gain LT Gain on Apple Stock      10,000.00 LT Loss on Shares      12,000.00 Exempt Other Sources Dividend From Company (Exempt)        7,000.00 Interest from Oklahoma Turnpike Authority bonds        8,000.00 Interest from Fed Ex bonds      10,000.00 Net Taxable Income 1,82,500.00

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