Question

Molly Ellen, bookkeeper for Keystone Company, forgot to send in the payroll taxes due on April 15. She sent the payment November 8. The IRS sent her a penalty charge of 10.80% simple interest on the unpaid taxes of $5,600. Calculate the penalty. (Remember that the government uses exact interest.) (Use Days in a year table) (Do not round intermediate calculations. Round your answer to the nearest cent.)

Answer 1

• $342.99

Explanation:

Given

• Penalty charge = 10.80% simple
• Interest amount = $5600
• Period = April 15 to November 8

To find

• Amount of penalty

Solution

Formula

• Penalty = Interest amount*penalty charge*time

Time period

• April 15 = 105
• November 8 = 322
• Difference = 322 - 105 = 207 days

Calculation of penalty

• $5600*0.108*207/365 = $342.99