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25 July, 20:51

A cash-basis sole proprietor had the following cash receipts and disbursement for the year: Net sales - $80,000 Cost of goods sold - $40,000 Operating expenses - $20,000 Employee payroll taxes - $3,000 Dividend income - $900 Interest income from a personal savings account $200 What is the amount of reported net profit reported on Schedule C

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  1. 25 July, 20:55
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    Net Income is $17,000

    Explanation:

    A sole proprietor is not taxed as a business entity but all the income and expenses should be reported on the income tax return. On schedule C all the details of profit and loss should be submitted with Form 1040.

    Net profit calculation to report on Schedule C is as follow:

    Net sales - $80,000

    Cost of goods sold ($40,000)

    Gross Income $40,000

    Operating expenses ($20,000)

    Operating Income $20,000

    Employee payroll taxes ($3,000)

    Net Income $17,000
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