Tom, a cash basis sole proprietor, provides the following information: Gross receipts $30,000 Dividend income (on personal investments) 200 Cost of sales 15,400 Other operating expenses 3,000 State business taxes paid 300 What amount should Tom report as net profits from his business? a.$11,400 b.$10,900 c.$11,300 d.$14,400 e.None of these choices are correct.
Tom, a cash basis sole proprietor, provides the following information: Gross receipts $30,000 Dividend income (on personal investments) 200 Cost of sales 15,400 Other operating expenses 3,000 State business taxes paid 300 What amount should Tom report as net profits from his business? a.$11,400 b.$10,900 c.$11,300 d.$14,400 e.None of these choices are correct.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Tom, a cash basis sole proprietor, provides the following information:
What amount should Tom report as net profits from his business?
| Gross receipts | $30,000 |
| Dividend income (on personal investments) | 200 |
| Cost of sales | 15,400 |
| Other operating expenses | 3,000 |
| State business taxes paid | 300 |
What amount should Tom report as net profits from his business?
a.$11,400
b.$10,900
c.$11,300
d.$14,400
e.None of these choices are correct.
Expert Solution
Step 1 : Notes
- Dividend income on personal investment is not a business income, therefore it will not be included in calculation of net profit .
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