Calculate the corporate income tax for Quarter 1. Use a corporate income tax rate of 21%.
| | Q1 (×1000) | Q2 (×1000) |
|------------------|-------------|-------------|
| Net Sales | 112 | 174 |
| COGS | (18) | (32) |
| Gross Profit | 94 | 142 |
| Overhead | (31) | (53) |
| Pre-tax Income | 63 | 89 |
Corporate Income Tax = $[?]
Multiply the product by 1000 to answer in dollars.
Answer (2)
The problem provides the pre-tax income for Quarter 1 ( $63 , 000 ) and the corporate income tax rate ( 21% ).
Calculate the corporate income tax by multiplying the pre-tax income by the tax rate: $63 , 000 × 0.21 .
The result of the calculation is $13 , 230 .
The corporate income tax for Quarter 1 is $13 , 230 .
Explanation
Understanding the Problem We are given the pre-tax income for Quarter 1 as $63,000 and the corporate income tax rate as 21%. We need to calculate the corporate income tax for Quarter 1.
Setting up the Calculation To calculate the corporate income tax, we multiply the pre-tax income by the tax rate. In this case, we have: C or p or a t e I n co m e T a x = P re − t a x I n co m e × T a x R a t e
Substituting the Values Substituting the given values, we get: C or p or a t e I n co m e T a x = $63 , 000 × 0.21
Calculating the Tax Performing the calculation: C or p or a t e I n co m e T a x = $13 , 230
Final Answer Therefore, the corporate income tax for Quarter 1 is $13 , 230 .
Examples
Understanding corporate income tax is crucial for businesses. For instance, if a small business earns a pre-tax income of $100 , 000 and the corporate tax rate is 21% , the business owes $21 , 000 in taxes. This knowledge helps in financial planning, budgeting, and ensuring compliance with tax laws. Accurately calculating and paying corporate income tax is essential for the financial health and sustainability of any company.
The corporate income tax for Quarter 1, based on a pre-tax income of $63,000 and a tax rate of 21%, is $13,230. This is calculated by multiplying the pre-tax income by the tax rate. Therefore, the answer is $13,230.
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