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?

Answer 1

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

Step-by-step explanation:

Juan's net profit (or loss) for the tax year can be calculated by subtracting his total expenses from his gross receipts. In this case, his total expenses are the sum of his advertising, office expense, rent, liability insurance, bookkeeping fees, utilities, and business meals purchased at restaurants. The calculation would be as follows:

Net Profit = Gross Receipts - Total Expenses

Net Profit = $80,000 - ($1,000 + $300 + $10,000 + $3,000 + $500 + $2,000 + $1,000)

Net Profit = $80,000 - $17,800

Net Profit = $62,200

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