Echeveria Company provides an incentive compensation plan under which its president receives a bonus equal to 10% of the company's income in excess of P600,000 before income tax but ater deduction of the bonus. The income before tax and bonus is P1,920,000 and the tax rate is 32%. What is the amount of bonus?

Echeveria Company provides an incentive compensation plan under which its president receives a bonus equal to 10% of the company's income in excess of P600,000 before income tax but ater deduction of the bonus. The income before tax and bonus is P1,920,000 and the tax rate is 32%. What is the amount of bonus?

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 15E

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?
Borat Company gives annual bonuses after the end of the year. Borat computes the bonuses based on the companys net income after deducting the bonuses but before deducting income taxes. Borats income before bonuses and income taxes is 565,000 for the current year. The effective income tax rate is 21%, and the bonus rate is 12%. Calculate Borats bonuses and income taxes for the current year. Round your final answer to two decimal places.
During the year, employee Sean Matthews earned wages in the amount of 250,000. Discuss how the employees HI tax will differ from the employers HI tax for this employee.
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.