29 Implification Corp has sales of 4250000 the firms cost of

29) Implification Corp. has sales of $4,250,000; the firm\'s cost of goods sold is $2,500,000; and its total operating expenses are $600,000. The firm\'s interest expense is $250,000, and the corporate tax rate is 40%. What is the firm’s tax liability?

Solution

Sales 4250,000

Less: COGS 2500,000

Gross Profit 1750,000

Less: Operating expenses 600,000

Operating Income 1150,000

Less: Interest Expense 250,000

Taxable Income 900,000

Tax Rate = 40%

Tax Liability = $360,000