James Jones is the owner of a small retail business operated as a sole proprietorship. During 2014, his business recorded the following items of income and expense:
Revenue from inventory sales ………………….$147,000
Cost of goods sold …………………………….. 33,500
Business license tax …………………………….. 2,400
Rent on retail space ……………………………… 42,000
Supplies …………………………………………. 15,000
Wages paid to employees ……………………… 22,000
Payroll taxes …………………………………… 1,700
Utilities ………………………………………… 3,600
a. Compute taxable income attributable to the sole proprietorship by completing Schedule C to be included in James’s 2014 Form 1040.
b. Compute self-employment tax payable on the earnings of James’s sole proprietor-ship by completing a 2014 Schedule SE, Form 1040.