SUMMATIVE TEST

Answer:

1. On his compensation income

First: 900,000
In excess of: 800,000 (900,000-800,000 x 25% + 102,500)
Compensation Tax due: 127,500

On his business income

Gross sales/receipts: 2,800,000 x 8%

Business Tax due: 224,000
Total Tax due: 351,500

2. Income Tax:
First: 2,800,000
In excess of: 2,000,000 (2,800,000-2,000,000 x 30% + 402,500)
Income Tax due: 642,500

Business Tax
12% = 2,800,000 x 12% 336,000
Total Tax due: 978,500
 3. Sales 8,400,000
Cost of sales 2,120,000
Operating Exp. 1,170,000
Net Taxable Pay. 5,110,000

First: 5,110,000
In excess of: 2,000,000 (5,110,000-2,000,000 x 30% + 402,500)
Income Tax due: 1,335,500

Income Tax due Using Graduated Tax rate 1,335,500

Less: 2nd quarter Tax payment based on 8% tax rate 220,000

(3,000,000-250,000 x 8%)
Annual Income tax payable 1,115,500

4. Amount
I. Gross Compensation Income 600K+20,000+30,000+50,000=700,000
II. Less: Personal Exemption 50,000
Additional Exemptions 100,000
III. Total Exemptions 150,000
IV. Taxable Income 550,000
V. Tax Due 52,500
VI. Less: Tax Withheld 19,500
VII. Tax Payable 33,000