BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation...

BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation expense of $10,000, and interest expense of $30,000. What is the net income for the firm using the following tax schedule?

Taxable Income Tax Rate

$ 1-50,000 10%

$ 50,001-75,000 20%

$ 75,001-100,000 30%

$100,001-335,000 40%

$335,001 + 50%

Expert Solution

Q-1)

- Calculating the Taxable Income of BOK:-

Particular	Amt in $
Sales	500,000.00
Less: COGS	(140,000.00)
Gross Profit	360,000.00
Less: Depreciation	(10,000.00)
Less: Admin. Expenses	(20,000.00)
EBIT	330,000.00
Less: Interest Expense	(30,000.00)
Taxable Income	300,000.00

Calculating the Tax Liability for the Taxable Income of $300,000:-

Tax Bracket	Tax rate		Tax
1-50,000	10%	50,000*10%	5000
50001-75,000	20%	25,000*20%	5000
75,001 - 100,000	30%	25,000*30%	7500
100,001 -335,000	40%	200,000*40%	80,000
		Total Tax Liability	97,500

Net Income = Taxable Income - Tax Liability = $300,000 - $97,500

Net Income = $202,500

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