Chapter 11, Problem 11.2AP

Mary carries on business as a sole proprietor that generated $100,000 in net accounting income. Included in this amount are: • $7,000 of amortization expense; • $4,000 for bad debt expense; • $112,000 cost of goods sold; and • $12,000 meals and entertainment with clients.   Mary's maximum CCA has been calculated at $10,000 for the year. What is Mary's business income for income tax purposes? A.      $113,000 B.      $109,000 C.       $107,000 D.      $103,000

Please explain the solution to this general accounting problem with accurate principles.

XDR Industries products a single product. The company's absorption costing income statement for April is as follows: