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Question - Jarvie loves to bike. In fact, he has always turned down better-paying jobs to work in bicycle shops where he gets an employee discount. At Jarvie's current shop, Bad Dog Cycles, each employee is allowed to purchase four bicycles a year at a discount. Bad Dog has an average gross profit percentage on bicycles of 25 percent. During the current year, Jarvie bought the following bikes:
Description
Retail Price
Cost
Employee Price
Specialized road bike
$4100
$2800
$2870
Rocky mountain bike
$7,700
$5,900
$6,160
Trek road bike
$3,600
$3,060
$2,520
Yeti mountain bike
$4,400
$3,480
$3,520
Required - What amount is Jarvie required to include in taxable income from these purchases?
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