Question

 Sales for J. P. Hulett Inc. during the past year amounted to $3.6million. Gross profits totaled...

 Sales for J. P. Hulett Inc. during the past year amounted to $3.6million. Gross profits totaled $1.01 ​million, and operating and depreciation expenses were $499,000 and $348,000​, respectively. Dividend income for the year was $14,000​, which was paid by a firm in which Hulett owns

85

percent of the shares. Use the corporate tax rates shown:

 Taxable Income Marginal Tax Rate

​$0−​$50,000    15%

​$50,001−​$75,000    25%

  

​$75,001−​$100,000 34%

  

​$100,001−​$335,000   39%

  

​$335,001−​$10,000,000 ​ 34%

  

​$10,000,001−​$15,000,000   35%

  

​$15,000,001−​$18,333,333   ​ 38%

  Over​ $18,333,333 ​ 35%

to Comcute the​corporation's tax liability. What are the​ firm's average and marginal tax​ rates?

The​ firm's tax liability for the year is

​$

Homework Answers

Answer #1

Operating Profits = Gross Profits - Operating Expenses - Depreciation Expenses

= $1,010,000 - $499,000 - $348,000 = $163,000

Taxable Income = Operating Profits - (Dividend Income - 70% Exculsion)

= $163,000 - [$14,000 - (0.70 * $14,000)]

= $163,000 - [$14,000 - $9,800]

= $163,000 - $4,200 = $158,800

a). Tax Liability = Taxable Income * Tax Rate

= [$50,000 * 0.15] + [($75,000 - $50,000) * 0.25] + [($100,000 - $75,000) * 0.34] + [($158,800 - $100,000) * 0.39]

= $7,500 + $6,250 + $8,500 + $22,932 = $45,182

b). Average Tax Rate = Tax LIability / Taxable Income

= $45,182 / $158,800 = 0.2845, or 28.45%

c). Marginal Tax Rate = 39%

As the tax rate charged on the next earned dollar is 39%

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Sales for J. P. Hulett Inc. during the past year amounted to $ 3.8 million. Gross...
Sales for J. P. Hulett Inc. during the past year amounted to $ 3.8 million. Gross profits totaled $ 1.07 ​million, and operating and depreciation expenses were $ 502 comma 000 and $ 348 comma 000​, respectively. Dividend income for the year was $ 11 comma 000​, which was paid by a firm in which Hulett owns 85 percent of the shares. Use the corporate tax rates shown in the popup​ window, LOADING...​, to Comcute the​ corporation's tax liability. What...
Company A has $82,900 in taxable income, and Company B has $4.0 million in taxable income....
Company A has $82,900 in taxable income, and Company B has $4.0 million in taxable income. Using the tax rates from the Table below. What is the difference between the tax bills of these two firms? (round to nearest dollar) Taxable Income Tax Rate $ 0-50,000 15% $ 50,001-75,000 25% $ 75,001-100,000 34% $ 100,001-335,000 39% $ 335,001-10,000,000 34% $ 10,000,001-15,000,000 35% $ 15,000,001-18,333,333 38% $ 18,333,334+ 35%
3.17. Tax: Manz Property Management Company announced that in the year ended June 30, 2014, its...
3.17. Tax: Manz Property Management Company announced that in the year ended June 30, 2014, its earnings before taxes amounted to $1,478,936. Calculate its taxes using Exhibit 3.6 in the text. Earnings before interest and taxes $1,478,936 U.S. Federal Corporate Income Tax Rates for 2013 Taxable Income from Upto Rate 0 50,000 15% 50,001 75000 25% 75001 100,000 34% 100,001 335,000 39% 335,001 10,000,000 34% 10,000,001 15,000,000 35% 15,000,001 18,333,333 38% 18,333,334 0% 35% please show work
Sandersen Inc. sells minicomputers. During the past​ year, the​ company's sales were $3.13 million. The cost...
Sandersen Inc. sells minicomputers. During the past​ year, the​ company's sales were $3.13 million. The cost of its merchandise sold came to ​$1.83 ​million, and cash operating expenses were ​$360,000​; depreciation expense was ​$95,000​, and the firm paid​$140,000 in interest on its bank loans.​ Also, the corporation paid ​$20,000 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, LOADING... . Data Table Corporate...
Chapter 2 - Master it! Using Excel to find the marginal tax rate can be accomplished...
Chapter 2 - Master it! Using Excel to find the marginal tax rate can be accomplished using the VLOOKUP function. However, calculating the total tax bill is a little more difficult. Below we have shown a copy of the IRS tax table for an individual. Often, tax tables are presented in this format. If taxable income is over -- But not over -- The tax is: $0 $9,075 10% of the amount over $0 9,075 36,900 $907.50 plus 15% of...
A. Robbins Corporation is a retail dealer for electrical equipment. The taxable income is $701,500. Calculate...
A. Robbins Corporation is a retail dealer for electrical equipment. The taxable income is $701,500. Calculate the tax liability. Corporate Tax Rates 15% $ 0–$50,000 25% $ 50,001–$75,000 34% $75,001–$10,000,000 35% over $10,000,000 Additional surtax: •5% on income between $100,000 and $335,000. •3% on income between $15,000,000 and $18,333,333. B. ‘Taxes are a fact of life, and businesses, like individuals, must pay taxes on Income’ – Elucidate.
Sandersen Inc. sells minicomputers. During the past year the​ company's sales were ​$3.4 million. The cost...
Sandersen Inc. sells minicomputers. During the past year the​ company's sales were ​$3.4 million. The cost of its merchandise sold came to ​$1.9 ​million, and cash operating expenses were ​$391,000​; depreciation expense was ​$110,000​, and the firm paid ​$152,000 in interest on its bank loans.​ Also, the corporation received ​$45,000 in dividend income but paid ​$21,000 in the form of dividends to its own common stockholders. Calculate the gross profit, operating profit, taxable dividend income, taxable ordinary income, tota tax...
Microchip Inc. had the following profits and losses in the years indicated. 2013 $  5,500,000 2014 350,000...
Microchip Inc. had the following profits and losses in the years indicated. 2013 $  5,500,000 2014 350,000 2015 (4,000,000) Corporate Income Tax Schedule Income ($) Rate (%) 0 - 50,000 15 50,000 - 75,000 25 75,000 - 100,000 34 100,000 - 335,000 39 335,000 - 10,000,000 34 10,000,000 - 15,000,000 35 15,000,000 - 18,333,333 38 Over 18,333,333 35 How much federal tax will it eventually pay for 2013? The corporate rate schedule is the same for all three years. Use carry...
(Corporate income tax​) Boisjoly Productions had taxable income of ​$ 19.5million. a. Calculate​ Boisjoly's federal income...
(Corporate income tax​) Boisjoly Productions had taxable income of ​$ 19.5million. a. Calculate​ Boisjoly's federal income taxes by using the corporate tax rate structure in the popup​ window, LOADING.... b. Now calculate​ Boisjoly's average and marginal tax rates. c. What would​ Boisjoly's federal income taxes be if its taxable income was ​$ ​million? d. Now calculate​ Boisjoly's average and marginal tax rates with taxable income of ​$ million. a. Calculate​ Boisjoly's federal income taxes. The total tax due is ​$...
Problem 7-1 Accounting Periods (LO 7.1) The Au Natural Clothing Factory has changed its year-end from...
Problem 7-1 Accounting Periods (LO 7.1) The Au Natural Clothing Factory has changed its year-end from a calendar year-end to March 31, with permission from the IRS. The income for its short period from January 1 to March 31 is $24,000. Tax Rate Schedule for Corporations Taxable Income Over But Not Over The Tax Is Of the Amount Over 0 $50,000 15% 0 $50,000 75,000 $7,500 + 25% $50,000 75,000 100,000 13,750 + 34% 75,000 100,000 335,000 22,250 + 39%...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT