Raymond Moss, vice president of Moss Auto Parts, gets an annual bonus of 15% of any income, before deducting bonus and income taxes, above $100,000. Income before bonus and income taxes is $250,000. The effective income tax rate is 30%. Required: 1. Compute the amount of Raymond Moss's bonus. Bonus

Answers

Answer 1

Answer:

$22,500

Explanation:

Raymond Moss's bonus is computed as the excess of $100,000 of income before bonus and income taxes.

In other words, the income before bonus and income taxes of $250,000 minus $100,000 is the amount upon which the bonus is computed.

Bonus=excess of income before bonus and income taxes*rate of bonus

income before bonus and income taxes.=$250,000-$100,000

income before bonus and income taxes.=$150,000

bonus rate=15%

Bonus=$150,000*15%

Bonus=$22,500


Related Questions

On January 1, 2012, Sunland Company purchased for $690000, equipment having a useful life of ten years and an estimated salvage value of $40200. Sunland has recorded monthly depreciation of the equipment on the straight-line method. On December 31, 2020, the equipment was sold for $160000. As a result of this sale, Sunland should recognize a gain of

Answers

Answer:

$54,820

Explanation:

The computation of the gain is shown below;

But before that following calculations must be done

Annual depreciation as per the straight-line method

= ($690,000 - $40,200) ÷ (10 years)

= $64,980

Now accumulated depreciation for 9 years is

= $64,980 × 9 years

= $584,820

Now the book value is

= $690,000 - $584,820

= $105,180

Now the gain is

= Sale value - book value

= $160,000 - $105,180

= $54,820

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