Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

P13-2 2. Corporate tax rates vary with the amount of taxable income. What curren

ID: 2703820 • Letter: P

Question

P13-2

2. Corporate tax rates vary with the amount of taxable income.

What currently is the range (lowest and highest) of corporate tax

rates in the United States?


P13-3

3. What is meant by the statement that depreciation provides a tax

shield? Explain how this works.


P13-4

4. Determine the marginal and average tax rates under the tax law

for corporations with the following amounts of taxable income:

a. $60,000

b. $150,000

c. $500,000


P14-1

1. The Robinson Company has the following current assets and

current liabilities for these two years:

2011 2012

Cash and marketable securities $50,000 $50,000

Accounts receivable 300,000 350,000

Inventories 350,000 500,000

Total current assets $700,000 $900,000

Accounts payable $200,000 $250,000

Bank loan 0 150,000

Accruals 150,000 200,000

Total current liabilities $350,000 $600,000

a. Compare the current ratios between the two years.

b. Compare the acid-test ratios between 2011 and 2012.

Comment on your findings.


P14-5

5. Following are selected financial data in thousands of dollars for

the Hunter Corporation.

2012 2011

Current assets $ 500 $400

Fixed assets, net 700 600

Total assets 1,200 1,000

Current liabilities 300 200

Long-term debt 200 200

Common equity 700 600

Total liabilities and equity $1,200 $1,000

Net sales $1,500 $1,200

Total expenses 1,390 1,100

Net income 110 100.

a. Calculate Hunter

Explanation / Answer

13-2


Americans are infatuated with the superlative. We are constitutionally drawn to the best, the biggest, the most. But few of us rejoiced at the news that as of April 1st, the United States had assumed the title of having the highest corporate tax rate in the world. The dubious feat was widely reported after Japan officially lowered its headline corporate tax rate Sunday from 39.5% to 38.01%