C12-Chp-05-2-Homework-Sol-Dividends-EXCEL-2012

C12-Chp-05-2-Homework-Sol-Dividends-EXCEL-2012 - 1. Intro....

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c29b0f3ae18b8557b26c6a5fce5b70baf2224ade.xls Page 1 of 4 No. Ans 1 B Earnings and Profits are a measure of dividend paying ability. 2 C Ms. Rich. 3 B Frugal 4 C Ernie Year 2011 $40,000 $40,000 2012 40,000 40,000 Earnings and profits balance $80,000 5 B Charlotte Corporation Sales $700,000 Cost of sales $400,000 Municipal bond interest 12,000 Compensation 100,000 Meals and entertainment (Gross) 20,000 Payroll taxes, and Miscellaneous Expense 140,000 Subtotal 660,000 712,000 Net Income before taxes 52,000 Total $702,000 $702,000 Net income before taxes $52,000 Less municipal bond interest (12,000) Add disallowed entertainment 10,000 Taxable income 50,000 Income tax rate 15% Federal income tax due 7,500 Taxable income 50,000 Add municipal bond interest 12,000 Subtract disallowed deductions (10,000) Subtract federal income tax (7,500) 100,000 $144,500 6 Taxable income per return $125,000 Tax exempt interest received 2,500 127,500 Federal income taxes 32,000 Bus. meals in excess of 50% limit 3,500 Contributions in excess of limit 1,500 (37,000) Increase in E & P 90,500 Beginning E & P 50,000 Ending E & P $140,500 $50,000 15% $7,500 $25,000 25% $6,250 $25,000 34% $8,500 $25,000 39% $9,750 $32,000 Income Tax
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2. Cash Dist.
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C12-Chp-05-2-Homework-Sol-Dividends-EXCEL-2012 - 1. Intro....

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