An accountant for a corporation forgot to pay the firm's income tax of $725,769.12 on time. The government charged a penalty of 9.5% interest for the 37 days the money was late. Find the total amount (tax and penalty) that was paid. Assume 365 days in a year.
An accountant for a corporation forgot to pay the firm's income tax of $725,769.12 on time. The government charged a penalty of 9.5% interest for the 37 days the money was late. Find the total amount (tax and penalty) that was paid. Assume 365 days in a year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
An accountant for a corporation forgot to pay the firm's income tax of
$725,769.12
on time. The government charged a penalty of
9.5%
interest for the
37
days the money was late. Find the total amount (tax and penalty) that was paid. Assume 365 days in a year.
Expert Solution
Step 1
Income Tax :— It is tax levied by goverment directly on their citizens.
Penalty on income tax :— It is a fine charged for the under reporting of income or late filing of return on the income tax.
Penalty is calculated on income tax not on income.
And it is charged only for the late days.
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