John's profit as would be calculated by an accountant?

Income Tax Fundamentals 2020
38th Edition
ISBN:9780357391129
Author:WHITTENBURG
Publisher:WHITTENBURG
Chapter3: Business Income And Expenses
Section: Chapter Questions
Problem 22MCQ
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John fishes for a living. Last year, he sold $120,000 of fish. Bait, nets and other
fishing supplies cost John $10,000 and he paid $40,000 in salaries to his helpers.
Depreciation on his boat and other equipment, as calculated using IRS rules, was
$15,000. What was John's profit as would be calculated by an accountant?
A) $55,000
B) $185,000
C) $85,000
D) $120,000
Transcribed Image Text:John fishes for a living. Last year, he sold $120,000 of fish. Bait, nets and other fishing supplies cost John $10,000 and he paid $40,000 in salaries to his helpers. Depreciation on his boat and other equipment, as calculated using IRS rules, was $15,000. What was John's profit as would be calculated by an accountant? A) $55,000 B) $185,000 C) $85,000 D) $120,000
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