Davis, a sole proprietor with no employees, has a Keogh profit-sharing plan to which he may contribute 15% of his annual earned income. For this purpose, "earned income" is defined as net self-employment earnings reduced by the
a) Deductible Keogh contribution.
b) Self-employment tax and the employer's portion of the deductible Keogh contribution.
c) Self-employment tax.
d) Deductible Keogh contribution and the employer's portion of self-employment tax.
Ans: d) Deductible Keogh contribution and the employer's portion of self-employment tax.
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California Company opened for business on April 1. Given below is the activity of the company for the month of April
Owners invested cash in business $40,000 Credit sales $160,000 Cash sales $20,000 Cost of goods sold $124,000 Cash purchases of inventory $50,000 Credit purchases of inventory $100,000 Cash collections from credit customers $72,000 Cash payment for credit purchases of inventory $44,000 Cash borrowed on note payable $54,000 Equipment purchased for cash $18,000 Cash dividend paid $14,000 Wages earned and paid $28,000 Wages earned and unpaid $4,000 Rent paid for April, May and June $6,000 Under accrual basis accounting, what is the net income for the month of April? A) $8,000 B) $12,000 C) $18,000 D) $22,000