Question

Juan is self-employed. During the tax year, he had the following income and expenses:

Gross receipts: $80,000
Advertising: $1,000
Office expense: $300
Rent: $10,000
Liability insurance: $3,000
Bookkeeping fees: $500
Utilities: $2,000
Business meals purchased at restaurants: $1,000

What is Juan's net profit (or loss) for the tax year?

a. $17,800
b. $62,200
c. $62,700
d. $80,000

Answer 1

Juan's net profit for the tax year is $62,200.

Step-by-step explanation:

To calculate Juan's net profit (or loss) for the tax year, we need to subtract his expenses from his gross receipts. Here are the calculations:

• Advertising: $1,000
• Office expense: $300
• Rent: $10,000
• Liability insurance: $3,000
• Bookkeeping fees: $500
• Utilities: $2,000
• Business meals purchased at restaurants: $1,000

Total expenses: $17,800

Net profit (or loss) = Gross receipts - Total expenses

Net profit (or loss) = $80,000 - $17,800

Net profit (or loss) = $62,200