Question

Computing Income Taxes

Answer 1

Answer:

The​ corporation's tax liability is $ 228,820.

Explanation:

To calculate tax liability we first have to find net profit. Detail calculation is given below.

Net profit Calculation

Sales                                                                                 $ 3,130,000

cost of goods sold and the operating expenses          ($ 2,080,000)

Interest expense                                                              ( $ 377,000)

Net profit                                                                           $ 673,000

Tax liability Calculation

Income fall under Tax bracket of  34%  ($75,001 to ​$10,000,0000 for corporate tax. No additional surtax will be charged as income do not fall under its net.

Tax liabilty = 673,000 * 34% = $ 228,820

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