The operating results for Peep Corporation, an S corporation, for last year were as follows:
Revenues
|
Revenues
|
|
|
Gross sales
|
$2,000,000
|
|
Tax-exempt bond interest
|
2,000
|
|
Dividend income
|
8,000
|
|
Section 1231 gain (land)
|
10,000
|
|
Expenses
|
|
|
Cost of goods sold
|
$900,000
|
|
Salaries
|
600,000
|
|
Rent
|
200,000
|
|
Utilities
|
60,000
|
|
Depreciation
|
40,000
|
|
Charitable contribution
|
12,000
|
|
Section 179 expense
|
20,000
|
a. Determine the corporation's net income and its separately stated items.
b. Determine the corporation's financial accounting income if the gain on the sale of the land is only $6,000 and depreciation is $32,000 under financial accounting rules.
c. Sample filled-in forms are also in Appendix C of this text.