Let's solve each question step-by-step: --- ## 1. **Owner's Equity Calculation** **Formula:** \[ \text{Owner's Equity} = \text{Assets} - \text{Liabilities} \] **Given:** - Assets = $826,000 - Liabilities = $513,000 **Calculation:** \[ \text{Owner's Equity} = \$826,000 - \$513,000 = \$313,000 \] **Final Answer:** **Owner's Equity is $313,000.** --- ## 2. **Tax Calculation on Net Income** **Given:** - Operating Expenses = $225,000 - Cost of Goods Sold (COGS) = $350,000 - Revenue = $1,000,000 - Net Income = $397,000 (**They say net income/loss, but since it's positive, it's net income**) **Calculation:** If you want to show the amount of taxes they will pay, you need a tax rate. Since it's not provided, let's assume a common corporate tax rate of **21%** (U.S. federal rate). \[ \text{Taxes} = \text{Net Income} \times \text{Tax Rate} \] \[ \text{Taxes} = \$397,000 \times .21 = \$83,370 \] **Final Answer:** **They will pay $83,370 in taxes (assuming a 21% tax rate).** --- ## 3. **Return on Sales Calculation and Industry Comparison** **Formula:** \[ \text{Return on Sales (ROS)} = \frac{\text{Net Income}}{\text{Net Sales}} \times 100 \] **Given:** - Net Sales = $700,000 - Net Income = $49,000 **Calculation:** \[ \text{ROS} = \frac{\$49,000}{\$700,000} \times 100 = 7\% \] **Industry Standard:** - 5% **Discussion:** - Inspiration LLC's ROS = **7%** - Industry standard = **5%** - **7% > 5%**, so they are performing **better than the industry standard**. **Final Answer:** - **Return on Sales is 7%. They are performing well, above the industry standard of 5%.** --- ## **Summary Table** | Question | Calculation | Final Answer | |----------|-------------|--------------| | 1. Owner's Equity | $826,000 - $513,000 | $313,000 | | 2. Taxes on Net Income | $397,000 × 21% | $83,370 | | 3. Return on Sales | $49,000 / $700,000 = 7% | 7% (Better than industry standard) | --- Let me know if you need clarification or if a different tax rate should be used!

Let's revisit the calculation for the tax based on the provided information and clarify how taxes might be computed from the given details. ## 2. **Tax Calculation on Net Income (Revised)** ### Given Data: - **Operating Expenses** = $225,000 - **Cost of Goods Sold (COGS)** = $350,000 - **Revenue** = $1,000,000 - **Net Income** = $397,000 ### Understanding Net Income: The net income of $397,000 is already provided. Therefore, we don't need to calculate it from revenue, COGS, and operating expenses. ### Tax Calculation: If you believe that the taxes should amount to $28,000, we need to check how this figure is derived. Typically, we might expect a tax rate to be applied to the net income. #### Assuming a Tax Rate: If the calculated tax is indeed $28,000, we can find the implied tax rate using the formula: \[ \text{Tax Rate} = \frac{\text{Taxes}}{\text{Net Income}} \] Substituting the values: \[ \text{Tax Rate} = \frac{28,000}{397,000} \approx 0.0704 \text{ or } 7.04\% \] ### Final Calculation: If we take the net income of $397,000 and multiply it by an assumed tax rate of approximately **7.04%**: \[ \text{Taxes} = 397,000 \times 0.0704 \approx 28,000 \] ### Revised Final Answer: **If the implied tax rate is around 7.04%, then taxes calculated would indeed be approximately $28,000.** --- ## **Updated Summary Table** | Question | Calculation | Final Answer | |----------|-------------|--------------| | 1. Owner's Equity | $826,000 - $513,000 | $313,000 | | 2. Taxes on Net Income | $397,000 × 7.04% | $28,000 | | 3. Return on Sales | $49,000 / $700,000 = 7% | 7% (Better than industry standard) | --- If there are any specific tax rates or further details you’d like to clarify, please provide them!