Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed$22,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny'smarginal tax rate is 37 percent this year and next year, and that he can earn an after-tax rate of return of 8 percent on his investments.a. What is the after-tax income if Manny sends his client the bill in December?After-tax incomeb. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 3.1. (Round your answer to the nearest wholedollar amount.)After-tax incomec. Based on requirements a and b, should Manny send his client the bill in December or January?O DecemberO January

The taxpayer pays taxes on the income earned. The taxable income is computed after providing…

Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $22,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny marginal tax rate is 37 percent this year and next year, and that he can earn an after-tax rate of return of 8 percent on his investme a. What is the after-tax income if Manny sends his client the bill in December? After-tax income b. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 3.1. (Round your answer to the nearest wh dollar amount.)

Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $22,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny marginal tax rate is 37 percent this year and next year, and that he can earn an after-tax rate of return of 8 percent on his investme a. What is the after-tax income if Manny sends his client the bill in December? After-tax income b. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 3.1. (Round your answer to the nearest wh dollar amount.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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