Problem 1-28 (ACP) Nature Company had an agreement to pay the sales manager a bonus of 5% of the entity's earnings. The income for the year before bonus and tax was P5,250,000. The income tax rate is 25%. Required: Determine the bonus under each of the following independent assumptions: 1. Bonus is a certain percent of the income before bonus and before tax. 2. Bonus is a certain percent of income after bonus but before tax. 3. Bonus is a certain percent of income after bonus and after tax. 4. Bonus is certain percent of income after tax but before bonus.

Problem 1-28 (ACP) Nature Company had an agreement to pay the sales manager a bonus of 5% of the entity's earnings. The income for the year before bonus and tax was P5,250,000. The income tax rate is 25%. Required: Determine the bonus under each of the following independent assumptions: 1. Bonus is a certain percent of the income before bonus and before tax. 2. Bonus is a certain percent of income after bonus but before tax. 3. Bonus is a certain percent of income after bonus and after tax. 4. Bonus is certain percent of income after tax but before 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

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