2. An entity reports profit before bonus and taxes of P1,800.00 during the year. The entity has an established policy of paying its top management a 12% bonus on annual profit. The entity is subject to an income tax rate of 30%. Requirements: Compute for the amount of bonus under each of the following bonus schemes: a. Bonus is based on profit before deducting bonus and income tax. b. Bonus is based on profit after deducting bonus but before deducting income tax. C. Bonus is based on profit before deducting bonus but after deducting income tax.

2. An entity reports profit before bonus and taxes of P1,800.00 during the year. The entity has an established policy of paying its top management a 12% bonus on annual profit. The entity is subject to an income tax rate of 30%. Requirements: Compute for the amount of bonus under each of the following bonus schemes: a. Bonus is based on profit before deducting bonus and income tax. b. Bonus is based on profit after deducting bonus but before deducting income tax. C. Bonus is based on profit before deducting bonus but after deducting income tax.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 10P: Bonus Obligation and Income Tax Expense James Kimberley, president of National Motors, receives a...

See similar textbooks

Similar questions

Suppose that Blake Companys total pretax difference from a change to FIFO was 100,000 and the company pays a bonus of 5% of its income before income taxes and bonus to employees. If Blake pays an additional bonus | based on the change in income, would it recognize any expense? If so, when and how much?
Bonus Obligation and Income Tax Expense James Kimberley, president of National Motors, receives a bonus of 10% of Nationals profits above 1,500,000, before the bonus and the corporations income taxes are deducted. Nationals effective income tax rate is 21%. Profits before income taxes and his bonus are 5,000,000 for 2019. Required: 1. Compute the amount of Kimberleys bonus for 2019. 2. Compute National Motors income tax expense for 2019. 3. Prepare journal entries at the end of 2019 to record the bonus and income taxes. 4. Show how the bonus and income taxes would be reported on National Motors December 31,2019, balance sheet.
Fisafolia Corporation has gross income from operations of $210,000 and operating expenses of $160,000 for 2019. The corporation also has $30,000 in dividends from publicly traded domestic corporations in which the ownership percentage was 45 percent. Calculate the corporation's dividends received deduction for 2019. $_____________ Assume that instead of $210,000, Fisafolia Corporation has gross income from operations of $135,000. Calculate the corporation's dividends received deduction for 2019. $___________ Assume that instead of $210,000, Fisafolia Corporation has gross income from operations of $158,000. Calculate the corporation's dividends received deduction for 2019. $_____________
Rhodes Corporations financial statements are shown after part f. Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions. a. What is the net operating profit after taxes (NOPAT) for 2020? b. What are the amounts of net operating working capital for both years? c. What are the amounts of total net operating capital for both years? d. What is the free cash flow for 2020? e. What is the ROIC for 2020? f. How much of the FCF did Rhodes use for each of the following purposes: after-tax interest, net debt repayments, dividends, net stock repurchases, and net purchases of short-term investments? (Hint: Remember that a net use can be negative.) Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
Lemur Corp. is going to pay three employees a year-end bonus. The amount of the year-end bonus and the amount of federal income tax withholding are as follows. Lemurs payroll deductions include FICA Social Security at 6.2%, FICA Medicare at 1.45%, FUTA at 0.6%, SUTA at 5.4%, federal income tax as previously shown, state income tax at 5% of gross pay, and 401(k) employee contributions at 2% of gross pay. Record the entry for the employee payroll on December 31.
JIMIN Company has an agreement to pay the executive officers a bonus of 5% of the entity’s earnings. Theincome for the year before bonus and tax is ₱8,750,000. The income tax rate is 30% of income after bonus.Requirements:9. Determine the BONUS under each of the following independent assumptions:A. Bonus is based on income before bonus and before tax.B. Bonus is based on income after bonus and after tax. C. Bonus is based on income after bonus but before tax.D. Bonus is based on income after tax but before bonus
JIMIN Company has an agreement to pay the executive officers a bonus of 5% of the entity’s earnings. The income for the year before bonus and tax is ₱8,750,000. The income tax rate is 30% of income after bonus. Determine the BONUS under each of the following independent assumptions: A. Bonus is based on income before bonus and before tax.B. Bonus is based on income after bonus and after-tax.