s3000 nensusdewndend Income During the year just ended, Shering Diestributors, I
ID: 1172135 • Letter: S
Question
s3000 nensusdewndend Income During the year just ended, Shering Diestributors, Inc, had pretax earmnings from operabions of $486,000 In addtion, during the year t recened the 40%tax bracket and is eligible for a 70% divider de cus on on its Tank Industries stock a. Calculate the firm's tax on its operating earnings only b. Find the tax and the after-tax amount attributable to the interest income from Zig Manufacturing bonds c. Find the tax and the afler-tax amount attributable to the dividend income from the Tank Industries, Inc, common stock d. Compare, contrast, and discuss the afer-tax amounts resulting from the interest income and dividend income calculated in parts b. and c. e. What is the firm's totail tax liability for the year? Taxable amount Tax (40%) After-tax amount d. Compare, contrast, and discuss the after-tax amounts resulting from the interest income and dividend income calculated in parts b. and c. (Select all the choices that apply) The after-tax amount of dividends received. S26.400, exceeds the after-tax amount of interest $18,000, due to the 70% corporate dividend exclusion The after-tax amount of dividends received $18 000 exceeds the aner-tax amount of interest $26,400, due to the 70% corporate dividend ecuson Since the after-tax amount o interest exceeds the after-tax amount of dividends. this increases the attractiveness of stock investments by one corporation n another relative to A. ? B. ? C D D. Since the ater-tax amount of dividends exceeds the ater tax amount of interest,this increases the attractiveness of stock investments by one corporation in another relative to e. The total tax liablity for the year is s (Round to the nearest dolar) Enter any number in the edit fields and then continue to the next question bond investments bond investmentsExplanation / Answer
a) Tax on operating entity of $486,000=$194,400
b) Tax on interest income of $30,000=$12,000 and after tax amount on interest income=$30,000-$12,000=$18,000
c) Tax on dividend income of ($30,000- (70% of $30,000))=$3,600 and after tax amount on dividend income=$30,000-$3,600=$26,400
d) Option A & D are correct based on the results in b) & c) above.
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