Problem:

James Jones is the owner of a small retail business operating as a sole proprietorship. During 2013, his business recorded recorded the following items of income and expense:

• revenue from inventory sales 147,000
• cost of goods sold 33,500
• business license tax 2,400
• rent on retail space 42,000
• supplies 15,000
• wages paid to employees 22,000
• payroll taxes 1,700
• utilities 3,600

Required:

Question 1: Compute taxable income attributable to the sole proprietorship by completing Schedule C to be included in James's 2013 Form 1040

Question 2: Compute self-employment tax payable on the earnings of James's sole proprietorship by completing a 2013 Schedule SE, Form 1040

Note: Please show the work not just the answer.