In 2018, Coral Corporation (a C corporation) sold $100,000 of merchandise for which it paid $40,000. It also paid $35,000 of other expenses. All transactions were in cash. What is Coral Corporation's after-tax net cash inflow?

Question

Quizplus · Accepted Answer

To find the after-tax net cash inflow, we need to calculate the net income first.

Net income = Revenue - Cost of goods sold - Other expenses 
Net income = $100,000 - $40,000 - $35,000 
Net income = $25,000

Next, we need to calculate the taxes paid by Coral Corporation.

Taxable income = Net income - Deductions 
Since we don't have any information about deductions, we'll assume there are none. 
Taxable income = $25,000 
Corporate tax rate = 21% 
Taxes paid = Taxable income x Corporate tax rate = $25,000 x 0.21 = $5,250

Finally, we can calculate the after-tax net cash inflow:

After-tax net cash inflow = Revenue - Cost of goods sold - Other expenses - Taxes paid 
After-tax net cash inflow = $100,000 - $40,000 - $35,000 - $5,250 
After-tax net cash inflow = $19,750

Therefore, the correct answer is D, $19,750.

In 2018, Coral Corporation (A C Corporation) Sold $100,000 of Merchandise