(Computing income taxes) Sandersen Inc. sells minicomputers. During the past yea

Question

(Computing income taxes) Sandersen Inc. sells minicomputers. During the past year, the company's sales were $3.00 million. The cost of its merchandise sold came to $2.00 million, and cash operating expenses were $400,000; depreciation expense was $100,000, and the firm paid $150,000 in interest on its bank loans. Also, the corporation paid $25,000 in the form of dividends to its own common stockholders. Calculate the corporation's tax liability by using the corporate tax rate structure in the popup window. The corporation's tax liability is Round to the nearest dollar) Data Table Corporate Tax Rates 15% 25% 34% 35% Additional surtax: ·5% on income between $100,000 and $335,000 ·3% on income between $15,000,000 and $18,333,333 $0 $50,000 $50,001$75,000 $75,001$10,000,000 over $10,000,000

Explanation / Answer

Calculation of Net Profit

Calculation of Tax

Particulars Amount in $ Amount in $ Sales 3,000,000 Less;Cost 2,000,000 Gross Profit (Sales - Cost) 1,000,000 Less: Operating Expenses 400,000 Depreciable Expenses 100,000 Interest on Loan 150,000 Dividend Paid 25,000 Total Expenses 675,000 675,000 Net Profit(Gross Profit - Total Expenses 325,000

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