During the past year, ALL Supply, Inc., had sales of $3 million, cost of goods s
ID: 2815706 • Letter: D
Question
During the past year, ALL Supply, Inc., had sales of $3 million, cost of goods sold of $1.8 million, operating expenses of $800,000, and interest expenses of $200,000. ALL Supply paid preferred stock dividends of $200,000 during the year. Using the U.S. Federal corporate tax rates, what was ALL Supply’s taxable income, and its total tax liability for the year. What is ALL Supply’s average tax rate. (You will need to construct an income statement to answer. Use proper Income Statement format. Do not go too far!!) (8 Points) 2 points Income Statement format 2 points each listed in bold
Explanation / Answer
Note :- It is assumed that the year is 2017 and the tax rate for year 2017 is
Over 100,000 but not over 335,000 - 22,250 + 39%
ALL SUPPLY INCOME STATEMENT
Taxable Income - $200,000
Total Tax liability - $61,250
Average Tax rate - 30.625% (61250/200000*100)
Particulars Amount Sales Revenue 3,000,000 COGS (1,800,000) Gross Profit 1,200,000 Operating Expense (800,000) Income from Operations 400,000 Interest Expense (200,000) Net Income before tax (Taxable Income) 200,000 Tax Expense (22,250 + (100,000*39%)) (61,250) Net Income after tax 138,750 Preferred Dividend (200,000) Net Income (61,250)Related Questions
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