Smith operates a roof repair business. This year Smith's business generated cash receipts of $32,000 and Smith made the following expenditures associated with his business: Advertising $ 500 Car and truck expenses 1,360 Depreciation 3,200 Employee compensation 5,000 Education 1,000 The education expense was for a two-week, nighttime course in business management. Smith believes the expenditure should qualify as an ordinary and necessary business expense. Smith is on the cash method and calendar year. What net income should Smith report from his business

Question

Business

Sydney

11 August, 23:15

Smith operates a roof repair business. This year Smith's business generated cash receipts of $32,000 and Smith made the following expenditures associated with his business: Advertising $ 500 Car and truck expenses 1,360 Depreciation 3,200 Employee compensation 5,000 Education 1,000 The education expense was for a two-week, nighttime course in business management. Smith believes the expenditure should qualify as an ordinary and necessary business expense. Smith is on the cash method and calendar year. What net income should Smith report from his business

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Answers (1)

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Lindsay Beasley · Answer 1

Net income = $20,940

Explanation:

Answer 1.

Accounts

Cash Receipts 32,000

Expenses

Advertising 500

Depreciation 3,200

Car & Truck Expense 1,360

Employee Compensation 5,000

Education 1,000 11,060

Net Income 20,940

Therefore, the net income that Smith should report from his business after considering all the cash receipts and all the expenditures associated with his business is $20,940. All the expenses are to be deducted from income.