Question

Peggy is an executive for the Tan Furniture Manufacturing Company. She purchased furniture from the company for $9,500, the price Tan ordinarily would charge a wholesaler for the same items. The retail price of the furniture was $12,500, and Tan's cost was $9,000. The company also paid for Peggy's parking space in a garage near the office. The parking fee was $600 for the year. All employees are allowed to buy furniture at a discounted price comparable to that charged to Peggy. However, the company does not pay other employees' parking fees. Peggy's gross income from the above is:

Answer 1

Tan Furniture Manufacturing Company

Peggy's gross income from the above is:

= $3,000.

Step-by-step explanation:

a) Data and Calculations:

Retail price of the furniture = $12,500

Discounted price for employees = $9,500

Gross income received by Peggy = $3,000 ($12,500 - $9,500)

b) The gross income represents the total amount of benefit derived by Peggy by purchasing the furniture from Tan Furniture Manufacturing Company instead of from another manufacturer.