Question

Apisco Tiger Inc. has annual cost of goods sold of $41,700, interest expense of $960, general and administrative expenses of $8,800, dividends paid of $2,170, depreciation of $1,400, and a tax rate of 21 percent. What is the firm's taxable income if it added $3,840 to retained earnings during the year

Answer 1

the taxable income is $7,607.59

Step-by-step explanation:

The computation of the taxable income is shown below:

Net income after tax is

= Dividend paid + Retained earnings

= $2,170 + $3,840

= $6,010

Now Taxable income is

= Net income ÷ (1 - tax rate)

= $6,010 ÷ (1 - 0.21)

= $7,607.59

Hence, the taxable income is $7,607.59