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Builtrite had sales of $700,000 and COGS of $280,000. Inaddition, operating expenses were calculated at 25% of sales.Builtrite also received dividends of $50,000 and paid out commonstock dividends of $25,000 to its stockholders. A long-term capitalgain of $70,000 was realized during the year along with a capitalloss of $50,000.1. What is Builtrite’s taxable income?2. Based on their taxable income, what is Builtrite’s taxliability?3. If we add to our problem that Builtrite also had $10,000 ininterest expense, which of the following statements is correct(assuming the same marginal tax rate of 39%)?•Taxable income would increase by $10,000•Taxable income would decrease by $10,000.•Taxable income would decrease by $6,100.•Taxable income would increase by $6,1004. If Builtrite had experienced a long-term capital loss of$80,000 (instead of the $50,000 long-term capital loss stated inthe problem), and still had the $70,000 long-term capital gainstated in the problem, which of the following is correct:•taxable income would decrease by $30,000•taxable income would not change•taxable income would decrease by $10,000•taxable income would decrease by $20,0005. (This problem is not related to the above problem) Last yearBuiltrite had retained earnings of $150,000. This year, Builtritehad true net profits after taxes of $80,000 and also paid apreferred dividend of $20,000. What is Builtrite’s new level ofretained earnings?