Problemterry and jim are both involved in operating illegal, Ask an Expert

Accounting

Problem:

Terry and Jim are both involved in operating illegal businesses. Terry operates a gambling business and Jim operates a drug running business. Both businesses have gross revenues of $500,000. The businesses incur the following expenses.

Terry Jim

Employee Salaries $200,000 $200,000
Bribes to Police $25,000 $25,000
Rent and Utilities $50,000 $50,000
Cost of Goods Sold -0- $125,000

Required:

Question 1: What is Terry and Jim's report as net profit from their businesses?

Note: Please provide reasons to support your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91164919

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