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A mail-order computer company sells personal computers and peripherals. The company leased showroom space and a warehouse for $20,000 a year and installed $290,000 worth of inventory-checking and packaging equipment. The allowed depreciation expense for this capital expenditure ($290,000) amounted to $58,000 using the category of a 5-year MACRS. The store was completed and operations began on January 1st. The company had a gross income of $1,250,000 for the calendar year. Supplies and all operating expenses (other than the lease expense) were itemized as:

Cost of merchandise sold in the year: $600,000

Employee salaries and benefits: $150,000

Other supplies and expenses: $90,000

How much will the company pay in federal income taxes for the year?

Financial Management, Finance

  • Category:- Financial Management
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