Tigers Co likes to award its manager with bonuses based on the company's performance. The following describes the various bonus plans, tax rates, and the amount of "Income Before the Bonus and Tax" (IBBT): Bonus determination Plan A B IBBT $4,620,000 $2,280,000 $3,660,000 $1,290,000 Tax rate 40% 25% 20% с D 10% EQUIREMENTS: ssuming that the bonus is tax-deductible in each case, determine the following amounts for each bonus plan: 1. Bonus 2. Tax 3. Net Income Bonus equals 10% of the amount of (income after the bonus, but before the tax) Bonus equals 20% of the amount of (income before the bonus, but after the tax) Bonus equals 25% of the amount of ("Net Income") Bonus equals 40% of the amount that ("Net Income" exceeds $600,000)

Tigers Co likes to award its manager with bonuses based on the company's performance. The following describes the various bonus plans, tax rates, and the amount of "Income Before the Bonus and Tax" (IBBT): Bonus determination Plan A B IBBT $4,620,000 $2,280,000 $3,660,000 $1,290,000 Tax rate 40% 25% 20% с D 10% EQUIREMENTS: ssuming that the bonus is tax-deductible in each case, determine the following amounts for each bonus plan: 1. Bonus 2. Tax 3. Net Income Bonus equals 10% of the amount of (income after the bonus, but before the tax) Bonus equals 20% of the amount of (income before the bonus, but after the tax) Bonus equals 25% of the amount of ("Net Income") Bonus equals 40% of the amount that ("Net Income" exceeds $600,000)

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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Question

Tigers Co likes to award its manager with bonuses based on the company's performance. The following describes the various bonus plans, tax rates, and the amount of "Income Before the Bonus and Tax" (IBBT):
Bonus determination
Tax rate
40%
25%
20%
10%
Plan
A
B
с
D
IBBT
$4,620,000
$2,280,000
$3,660,000
$1,290,000
REQUIREMENTS:
Assuming that the bonus is tax-deductible in each case, determine the following amounts for each bonus plan:
1. Bonus
2. Tax
3. Net Income
Bonus equals 10% of the amount of (income after the bonus, but before the tax)
Bonus equals 20% of the amount of (income before the bonus, but after the tax)
Bonus equals 25% of the amount of ("Net Income")
Bonus equals 40% of the amount that ("Net Income" exceeds $600,000)

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