Ned Fromton, an employer, files his employment tax return 20 days after the due date of the return. The amount of tax that was unpaid is $6,000. Fromton's penalty is: Failure to file (5% × $6,000) = $300 Note: Any fraction of a month counts as a whole month. Example 3-8 Yeld Company failed to pay its employment taxes of $5,000 for March 20-- (due April 15) until May 20. The failure to pay penalty assessed against Yeld Company is: Failure to Pay Tax ($5,000 × 0.5% × 2) = $50.00 Interest on Taxes Due ($5,000 × 0.06 × 35/365) = 28.77 Total Penalty = $78.77 Note: In addition, a penalty for failure to make a timely deposit will also be assessed. Vulcan Company is a monthly depositor whose tax liability for March 20-- is $2,090. 1. What is the due date for the deposit of these taxes? 2. Assume that no deposit was made until April 29 (14 days late). Compute the following penalties. Assume a 365-day year in your computations. Round your answers to the nearest cent. a. Penalty for failure to make timely deposit. $ b. Penalty for failure to fully pay tax. $ c. Interest on taxes due and unpaid (assume a 6% interest rate). $ d. Total penalty imposed. $
Ned Fromton, an employer, files his employment tax return 20 days after the due date of the return. The amount of tax that was unpaid is $6,000. Fromton's penalty is: Failure to file (5% × $6,000) = $300 Note: Any fraction of a month counts as a whole month. Example 3-8 Yeld Company failed to pay its employment taxes of $5,000 for March 20-- (due April 15) until May 20. The failure to pay penalty assessed against Yeld Company is: Failure to Pay Tax ($5,000 × 0.5% × 2) = $50.00 Interest on Taxes Due ($5,000 × 0.06 × 35/365) = 28.77 Total Penalty = $78.77 Note: In addition, a penalty for failure to make a timely deposit will also be assessed. Vulcan Company is a monthly depositor whose tax liability for March 20-- is $2,090. 1. What is the due date for the deposit of these taxes? 2. Assume that no deposit was made until April 29 (14 days late). Compute the following penalties. Assume a 365-day year in your computations. Round your answers to the nearest cent. a. Penalty for failure to make timely deposit. $ b. Penalty for failure to fully pay tax. $ c. Interest on taxes due and unpaid (assume a 6% interest rate). $ d. Total penalty imposed. $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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| Ned Fromton, an employer, files his employment tax return 20 days after the due date of the return. The amount of tax that was unpaid is $6,000. Fromton's penalty is: | |
| Failure to file (5% × $6,000) = $300 Note: Any fraction of a month counts as a whole month. |
Example 3-8
Yeld Company failed to pay its employment taxes of $5,000 for March 20-- (due April 15) until May 20. The failure to pay penalty assessed against Yeld Company is:
| Failure to Pay Tax ($5,000 × 0.5% × 2) | = | $50.00 | |
| Interest on Taxes Due ($5,000 × 0.06 × 35/365) | = | 28.77 | |
| Total Penalty | = | $78.77 |
Note: In addition, a penalty for failure to make a timely deposit will also be assessed.
Vulcan Company is a monthly depositor whose tax liability for March 20-- is $2,090.
1. What is the due date for the deposit of these taxes?
2. Assume that no deposit was made until April 29 (14 days late). Compute the following penalties. Assume a 365-day year in your computations. Round your answers to the nearest cent.
| a. | Penalty for failure to make timely deposit. | $ |
| b. | Penalty for failure to fully pay tax. | $ |
| c. | Interest on taxes due and unpaid (assume a 6% interest rate). | $ |
| d. | Total penalty imposed. | $ |
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