The Stefani Co. had $293,000 in taxable income. Use the rates from Table 2.3. Ca

Question

The Stefani Co. had $293,000 in taxable income. Use the rates from Table 2.3.

Calculate the company’s income taxes. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

What is the average tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

What is the marginal tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32.)

table 2.3

The Stefani Co. had $293,000 in taxable income. Use the rates from Table 2.3.

Explanation / Answer

a.Income taxes=(50000*0.15)+(25000*0.25)+(25000*0.34)+(193000*0.39)

=$97520

NOTE:

The first $50000 is taxed at 15%;the next (75000-50000)=$25000 at 25% and so on.

b.Average tax rate=Total income taxes/Taxable income

=(97520/293000)

which is equal to

=33.28%(Approx).

c.Marginal tax rate for $293000 falls in the rate of =39%

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