Question

Last year, your company had sales of $3.6 million, cost of goods sold of $2.3 million and operating expenses amounting to $840,000. The firm had $114,000 in depreciation expense. In addition, the firm paid 8% interest on $625,000 in bonds, received $30,000 in dividend income, and sold property for a $10,000 capital loss.
What was the firm's tax payment?

a.$102,200

b.$91,950

c.$103,700

d.$110,390

e.$98,300

Answer 1

Answer:

$68,460

Explanation:

The computation of the firm tax payment is shown below:

= (Sales - cost of goods sold - operating expenses - depreciation expense + dividend income - interest payment) × tax rate

= ($3,600,000 - $2,300,000 - $840,000 - $114,000 + $30,000 - $50,000) × 21%

= $326,000 × 21%

= $68,460

The interest payment is

= $625,000 × 8%

= $50,000

The tax rate of the corporation is 21% and the same is applied in the above calculation

Note: This is the answer but the same is not provided in the given options