Question

Wayne Corporation is subject to State A's franchise tax. The tax is imposed at a rate of 1.2% of the corporation's net worth that is apportioned to the state by use of a two-factor formula (sales and property factors, equally weighted). The property factor includes real and tangible personal property, valued at historical cost as of the end of the taxable year. Forty percent of Wayne's sales are attributable to State A, and $600,000 of the cost of Wayne's tangible personal property is located in State A.

The following is the end-of-the-year balance sheet:

Cash $200,000

Equipment $1,000,000

Accumulated depreciation (300,000) 700,000

Furniture and fixtures $800,000

Accumulated depreciation (50,000) 750,000

Intangible assets 450,000

Total assets $2,100,000

Accounts and taxes payable $600,000

Long-term debt 750,000

Common stock 1,000

Additional paid-in capital 249,000

Retained earnings 500,000

Total liabilities and equity $2,100,000

In your computations, carry out any division to four decimal places before converting to a percentage. For example, .5413333 would be rounded to .5413 and converted to 54.13%. Use rounded amounts in subsequent computations. Round your final answer to the nearest dollar.

Determine the State A franchise tax payable by Wayne this year. $ _____???????______

Answer 1