Question

Garner Grocers began operations in 2011. Garner has reported the following levels of taxable income (EBT) over the past several years. The corporate tax rate was 34 percent each year. Assume that the company has taken full advantage of the tax code's carryback, carryforward provisions, and assume that the current provisions were applicable in 2011.

Answer 1

The Amount of Taxes Company Paid in 2014 is $102,000

What is Earnings Before Tax (EBT) ?

Earnings before tax (EBT) measures a company's financial performance. It is a calculation of a firm's earnings before taxes are taken out. The calculation is revenue minus expenses, excluding taxes.

EBT is a line item on a company's income statement. It shows a company's earnings with the cost of goods sold (COGS), interest, depreciation, general and administrative expenses, and other operating expenses deducted from gross sales.

Solution-

Calculating Garner Grocers tax liability for 2014

Taxable income (EBT) 2011, 2012, 2013, 2014

= -$3,200,000 + $200,000 + $5,00,000 + $2,800,000

= $3,00,000

Garner Grocers tax liability = $3,00,000 * Tax rate

Garner Grocers tax liability = $3,00,000 * 34%

Garner Grocers tax liability = $102,000

So, Garner Grocers tax liability for 2014 is $102,000

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