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A small business has pre-tax earnings of $250,000. If these earnings are taxed at the corporate rate of 35%, or alternatively could be declared as personal income with a tax rate of 28%, how much additional money would the owner receive by choosing the personal income option? a. $7,000 b. $17,500 c. $70,000 d. $87,500

A small business has pre-tax earnings of $250,000. If these earnings are taxed at the corporate rate of 35%, or alternatively could be declared as personal income with a tax rate of 28%, how much additional money would the owner receive by choosing the personal income option? a. $7,000 b. $17,500 c. $70,000 d. $87,500

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 8MC: A company has wants to earn an income of $60,000 after-taxes. If the tax rate is 32%, what must be...
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A small business has pre-tax earnings of $250,000. If these earnings are taxed at the corporate rate of 35%, or alternatively could be declared as personal income with a tax rate of 28%, how much additional money would the owner receive by choosing the personal income option? a. $7,000 b. $17,500 c. $70,000 d. $87,500
Transcribed Image Text:A small business has pre-tax earnings of $250,000. If these earnings are taxed at the corporate rate of 35%, or alternatively could be declared as personal income with a tax rate of 28%, how much additional money would the owner receive by choosing the personal income option? a. $7,000 b. $17,500 c. $70,000 d. $87,500
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