2 Interest versus dividend income During the year just ended, Shering Distributors, Inc., had pretax earnings from operations of $486,000. In addition, during the year it received $22,000 in income from interest onbonds it held in Zig Manufacturing and received $22,000 in income from dividends on its 5% common stock holding in Tank Industries, Inc. Shering is in the 40% tax bracket and is eligible for a 70% dividendexclusion on its Tank Industries stock.a. Calculate the firm's tax on its operating earnings only.b. Find the tax and the after-tax amount attributable to the interest income from Zig Manufacturing bonds.c. Find the tax and the after-tax amount attributable to the dividend income from the Tank Industries, Inc., common stock.d. Compare, contrast, and discuss the after-tax amounts resulting from the interest income and dividend income calculated in parts b. and c.e. What is the firm's total tax liability for the year?.....a. The tax on operating earnings is $(Round to the nearest dollar.)

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Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter11: The Corporate Income Tax

Section: Chapter Questions

Problem 5P: Fisafolia Corporation has gross income from operations of $210,000 and operating expenses of...

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Given the following year-end information, compute Greenwood Corporations basic and diluted earnings per share. Net income, 15,000 The income tax rate, 30% 4,000 shares of common stock were outstanding the entire year. shares of 10%, 50 par (and issuance price) convertible preferred stock were outstanding the entire year. Dividends of 2,500 were declared on this stock during the year. Each share of preferred stock is convertible into 5 shares of common stock.
Phillips-Van Heusen, an apparel manufacturer, reported net income (amounts in thousands) for Year 4 of 58,615 on sales of 1,460,235. It declared preferred dividends of 21,122. Preferred shareholders equity totaled 264,746 at both the beginning and end of Year 4. Common shareholders equity totaled 296,157 at the beginning of Year 4 and 364,026 at the end of Year 4. Phillips-Van Heusen had no noncontrolling interest in its equity. Total assets were 1,439,283 at the beginning of Year 4 and 1,549,582 at the end of Year 4. Compute the rate of ROCE for Year 4 and disaggregate it into profit margin for ROCE, assets turnover, and capital structure leverage ratio components.
Bastion Corporation earned net income of $200,000 this year. The company began the year with 10,000 shares of common stock and issued 5,000 more on April 1. They issued $7,500 in preferred dividends for the year. What is the EPS for the year for Bastion?
Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Refer to the information for Juroe Company on the previous page. Also, assume that Juroes total assets at the beginning of last year equaled 17,350,000 and that the tax rate applicable to Juroe is 40%. Required: Note: Round answers to two decimal places. 1. Calculate the average total assets. 2. Calculate the return on assets.
On January 1, 2019, Kittson Company had a retained earnings balance of 218,600. It is subject to a 30% corporate income tax rate. During 2019, Kittson earned net income of 67,000, and the following events occurred: 1. Cash dividends of 3 per share on 4,000 shares of common stock were declared and paid. 2. A small stock dividend was declared and issued. The dividend consisted of 600 shares of 10 par common stock. On the date of declaration, the market price of the companys common stock was 36 per share. 3. The company recalled and retired 500 shares of 100 par preferred stock. The call price was 125 per share; the stock had originally been issued for 110 per share. 4. The company discovered that it had erroneously recorded depreciation expense of 45,000 in 2018 for both financial reporting and income tax reporting. The correct depreciation for 2018 should have been 20,000. This is considered a material error. Required: 1. Prepare journal entries to record Items 1 through 4. 2. Prepare Kittsons statement of retained earnings for the year ended December 31, 2019.
Ponce Towers, Inc., had 50,000 shares of common stock and 10,000 shares of 100 par value, 8% preferred stock outstanding on January 1, 2011. Each share of preferred stock is convertible into four shares of common stock. The stock has not been converted. During the year, Ponce Towers issued additional shares of common stock as follows: For 2011, Ponce Towers, Inc., had income from continuing operations of 545,000 and a 72,000 loss from discontinued operations (net of tax). As vice president of finance for the firm, you have been asked to calculate earnings per share for 2011. The worksheet EPS has been provided to assist you.
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. $_____________

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