Answer:
Explanation:
Given:
Net income(before taxes) = $335,000
Effective tax rate for the current year = 29.5%.
We'll compute the actual tax rate using the formula given below:
⇒ Taxable Income = Net income(before taxes) - Interest revenue + Insurance premiums
Taxable Income = $335,000 - $35,000 + $12000
∴ Taxable Income = $312,000
⇒ Income tax expense = Income × Effective tax rate
Income tax expense = $335000 × 0.295
∴ Income tax expense = $98,825
Equating these two value in above formula, we get;