Problem:
Nikki works for the Shine Company, a retailer of upscale jewelry. How much taxable income does Nikki recognize under the following scenarios?
Required:
Question 1: Nikki buys a diamond ring from Shine Company for $13,400 (normal sales price, $17,440; Shine Company's gross profit percentage is 40%).
Question 2: Nikki receives a 27 percent discount on jewelry restoration services offered by Shine Company. This year, Nikki had Shine Company repair a set of antique earrings (normal repair cost $925; discounted price $675.25).
Note: Please provide through step by step calculations.