Chapter 1 (introduction to Corporate Financel: Chapter 2 (Financial Statements)

Question

Chapter 1 (introduction to Corporate Financel: Chapter 2 (Financial Statements) For questions #6-18, refer to the following financial information for Gannon Insurance ALL CALCULATIONS MUST BE SHOWN TO EARN POSITIVE RATING. PLEASE SHOW ALL WORKING CLEARLY. THANK YOU! 2016 2017 BALANCE SHEETS: Assets: Cash Accounts Receivable520,000 Inventory Fixed Assets, net 120,000 305,000 1,355,000 160,000 620,000 290,000 510,000 1,580,000 Total Assets Liabilities and Equity: Accounts Payable Long-term Debt Common Stock Retained Earnings Total Liabilities and Equity 350,000 500,000 50,000 455,000 1,355,000 $375,000 625,000 75,000 505,000 1,580,000 INCOME STATEMENT: Revenue Cost of Goods Sold General and Administrative Depreciation Expense Earnings Before Interest and Taxes Interest Expense Pretax Net Income 3,500,000 2,275,000 515,000 120,000 590,000 40,000 550,000 167,000 383,000 Income Taxes Net Income 12. What was Gannon's effective annual average tax rate in 2017?

Explanation / Answer

Average tax rate= incoem tax paid/taxable income
=167000/550000
=30.36%

The effective annuak average tax rate is 30.36%

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