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Silver Corporation, which operates a department store, sells a television to a store employee for $300. The regular customer price is $500, and the gross profit rate is 25%. The corporation also sells the employee a service contract for $120. The regular customer price for the contract is $150. How much must the employee include in income from both these transactions in total

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abiolataiwo2015

Answer:

$75

Explanation:

Calculation to determine How much must the employee include in income from both these transactions in total

Customer price for property $500

Less: Gross profit (25%*$500) ($125)

($500-$125=$375)

Employee price ($300)

INCOME $75

($375-$300)

Customer price for service $150

Less: (20%*$150)max exclusion (30)

($150-$30=$120)

Employee price 120

INCOME 0

($120-$120=$0)

Therefore the amount that the employee must include in income from both these transactions in total is $75

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