Answer:
The amount of bonus=$12,992.42
Explanation:
<em>Step 1: Express the formula as one of more algebraic equations</em>
Let B=Bonus
Let T=Taxes
B=8%x($245,000–B–T)
...equation 1
T=30%x($245,000–B)...equation 2
Since we have the value of T in equation 2, we can substitute it in equation 1 above;
B=8%x{(245,000–B–30%x(245,000–B)}
B=0.08 x {245,000-B-73,500+0.3 B}
B=0.08 x {245,000-73,500-B+0.3 B}
B=0.08 x {171,500-0.7 B}
B=13,720-0.056 B
B+0.056 B=13,720
1.056 B=13,720
B=(13,720/1.056)=$12,992.42
The amount of bonus=$12,992.42
<em>Step 2: Prepare the adjusting entry to record the bonus compensation</em>
Bonus compensation expense 12,992.42
Bonus compensation payable 12,992.42