Question

Andrews Corporation has income from operations of $220,000. In addition, it received interest income of $22,000 and received dividend income of $31,000 from another corporation. Finally, it paid $12,800 of interest income to its bondholders and paid $46,100 of dividends to its common stockholders. The firm's federal tax rate is 21%. What is the firm's federal income tax

Answer 1

$50,085

Step-by-step explanation:

The computation of the firm federal income tax is shown below:

Operational income $220,000

Add: interest income $22,000

Add dividend income ($31,000 × 30%) $9,300

Less: interest paid ($12,800)

Taxable income $238,500

Federal tax (21% × $238,500) $50,085

Hence, the firm federal income tax is $50,085