Question

In: Accounting

sales:$1,400,000 COGS:$845,000 G&A:$300,000 advertising:$$75,000 loan :$120,000 loan interest:$12,000 recieved dividend $20,000 paid common stock:$10,000 paid pref...

sales:$1,400,000
COGS:$845,000
G&A:$300,000
advertising:$$75,000
loan :$120,000
loan interest:$12,000
recieved dividend $20,000
paid common stock:$10,000
paid pref stock:$15,000

what is federal tax bill?
what is average tax rate? what is marginl tax rate?

Solutions

Expert Solution

Particulars Amount Amount
Sales $                            14,00,000
Less: Cost of Goods Sold $                              8,45,000
Gross Profit $        5,55,000
Less: Operating Expenses
General and Admin $                              3,00,000
Advertising $                                 75,000
Total Operating Expense $        3,75,000
Operating Income $        1,80,000
Other Income and Expenses
Dividend $                                 20,000
Interest Expense $                                -12,000 $              8,000
Taxable Income $        1,88,000
Federal Tax (50000*15%+25000*25%+ 25000*34%+88000*39%) $            56,570
Average Tax Rate 56570/188000 30.09%
Marginal Tax Rate 39.00%

Federal Tax bill = $56,570

Average Tax rate = 30.09%

Marginal Tax Rate = 39%


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