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Volgvan
3 years ago
9

This year, Paula and Simon (married filing jointly) estimate that their tax liability will be $218,000. Last year, their total t

ax liability was $182,000. They estimate that their tax withholding from their employers will be $188,800. Are Paula and Simon required to increase their withholdings or make estimated tax payments this year to avoid the underpayment penalty? If so, how much?
Business
1 answer:
romanna [79]3 years ago
5 0

Answer:

1. Yes

2. $7,400

Explanation:

Basic Rules For Estimated Tax For Individuals

Any individual who has estimated tax for the year of $1,000 or more and  whose withholding does not equal or exceed the “required annual payment” must make quarterly payments. Otherwise, a penalty may be assessed. The required annual payment is the smaller of the following amounts:  

1.Ninety percent of the tax shown on the current year's return.  

2.One hundred percent of the tax shown on the preceding year's return (the return must cover the full 12 months of the preceding year). If the AGI on the preceding year's return exceeds $150,000 ($75,000 if married filing separately), the 100% requirement is increased to 110%.

Are Paula and Simon required to increase their withholdings or make estimated tax payments this year to avoid the underpayment penalty?

Following the basic rules above, yes, Paula and Simon have to increase their withholdings or make estimated tax payments this year to avoid the underpayment penalty.

If so, how much?

Amount of income tax liability = $218,000

In general, taxpayers must pay at least 90 percent of their tax bill during the year to avoid an underpayment penalty when they file.

Therefore Minimum estimated payments-90% : $218,000 * 0.9 = $196,200

110% of the preceding year's tax: $182,000 * 1.10 = $200,200

According to the basic rules the required annual payment is the smaller which is $196,200.

Tax withholding from their employers = $188,800

Estimated tax payments required = $196,200 - $188,800 = $7,400

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Big Box Store has operated with a 30% average gross profit ratio for a number of years. It had $100,000 in sales during the seco
nydimaria [60]

Answer:

c) $20,000.

Explanation:

The computation of the estimated ending inventory is shown below:

We know that

Cost of goods sold = Beginning inventory + purchase made - ending inventory

And, the

Sales - gross profit = Cost of goods sold

$100,000 - $100,000 × 30% = Cost of goods sold

So, cost of goods sold would be

= $100,000 - $30,000

= $70,000

Now the ending inventory would be

$70,000 = $18,000 + $72,000 - ending inventory

$70,000 = $90,000  - ending inventory

So, the ending inventory would be

= $90,000 - $70,000

= $20,000

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3 years ago
Craig Manufacturing Company operates its three production departments within a single facility. Each department produces its own
Rus_ich [418]

Answer:

Craig Manufacturing Company operates its three production departments within a single facility. Each department produces its own products and maintains its own production equipment. Although they share a common facility, each department is overseen by a separate supervisor. Which one of the following costs is a direct cost of each department?

Production supervisor salary

Explanation:

Production supervisor salary serves as the overhead cost that is attribute to the production in the manufacturing company, it is direct cost for each department since every department has a supervisor

7 0
3 years ago
Reinvesting cash flow allows a firm produce additional products and generate additional sales.
german
True I think I am not 100% sure
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3 years ago
What are the goals when a government uses expansionary monetary policy?
Ainat [17]

Answer:

stimulating economic growth

Explanation:

Expansionary monetary policies are the action by the Fed that aims at stimulating economic growth.  They aim at increasing the money supply in the economy. Examples of expansionary monetary policies are open market purchases, reduction of the discount rate, and reduction in the reserve requirement ratio.

Expansionary monetary policies stimulate economic growth by encouraging investments and consumption spending. When the discount rate is reduced, interest rates reduce automatically. Banks will loan out more when they a lot of money in their custody. Expansionary monetary policies are applied when there is a slowdown in economic growth.

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3 years ago
Bros Co. expects its EBIT to be $100,000 every year forever. The firm can borrow at 11 percent. Bruce currently has no debt, and
Liula [17]

Answer:

WACC=17.15%

Explanation;

MV of equity=EBIT8(1-t)/Ke          

MV of equity=100,000*(1-.31)/.18=$383,333  

Total value of the firm=Market value of equity+present value of tax savings on interest

Total value of the firm based on EBIT= $383,333+.31*61,000

Total Value of the firm=$402,243

Keg=Keu+(Keu-Kd)*D/E*(1-t)

where Keu= cost of equity of un-geared company=18%

Keg=cost of equity of geared company=?

Kd=cost of debt=11%

Keg=.18+(.18-11)*61,000/(402,243-61,000)*.69

Keg=.18+.0086

Keg=18.86%

NoW revised WACC will be

WACC=Keg*MV of equity+Kd(1-t)*cost of debt/(total value of firm)

WACC=.1886*(402,243-61,000)+.11(1-.31)*61,000/(402,243)

WACC=17.15%                

5 0
3 years ago
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