Last year, California Sushi and Such (CSS) had sales of $65 million. The firm's operating expenses...
Last year, California Sushi and Such (CSS) had sales of $65 million. The firm's operating expenses amounted to $20 million and costs of goods sold totaled $15 million. In addition, CSS received $80,000 in dividend income, and paid $300,000 in dividends to its stockholders. CSS has $25 million in bonds outstanding with an annual interest payment of 9%. The firm also had $4 million in depreciation expense, and sold land for $3.5 million that had been purchased for $2.5 million several years earlier. What is the firm's tax liability?
| $5,214,300 |
| $5,189,100 |
| $4,995,900 |
| $5,460,000 |
| $5,205,900 |
Homework Answers
| Correct answer is: $5205900 | ||
| Workings: | ($ in million) | |
| Sales | = | $ 6,50,00,000 |
| Operating Expense | = | $ -2,00,00,000 |
| Cost of goods sold | = | $ -1,50,00,000 |
| Dividend Income ($80,000 X 50%) | = | $ 40,000 |
| Interest Expense ($25 million X 9%) | = | $ -22,50,000 |
| Depreciation Expense | = | $ -40,00,000 |
| Capital Gain ($3.5 million - $2.5 million) | = | $ 10,00,000 |
| Net Income | = | $ 2,47,90,000 |
| Tax Rate | = | 21% |
| Tax Liability | = | $ 52,05,900 |
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