Question

calculate the corporate income tax for quarter 1. use a corporate income tax rate of 21%.
income statement
\t\tq1 (x1000)\tq2 (x1000)
net sales\t150\t90
cogs\t(42)\t(30)
gross profit\t108\t60
overhead\t(50)\t(40)
pre - tax income\t58\t20
corporate income tax = $?
multiply the product by 1000 to answer in dollars

Explanation:

Step1: Identify Pre - tax Income for Q1

From the income statement, the pre - tax income for Quarter 1 (in thousands) is 58.

Step2: Calculate Tax Amount in Thousands

The corporate income tax rate is 21% or 0.21. To find the tax amount, we multiply the pre - tax income by the tax rate. So, the tax amount (in thousands) is $58\times0.21 = 12.18$.

Step3: Convert to Dollars

We need to multiply the tax amount (in thousands) by 1000 to get the amount in dollars. So, $12.18\times1000 = 12180$.

Answer:

12180