PP Ltd., a client of your firm, has a November 30th year end and has requested you to ad- vise them on what its monthly instalments for the 2011 tax year will be.Its taxes payable for its November 30, 2009 and November 30, 2010 years were $13,800 and $13,200, re- spectively.Its estimated taxes payable for the November 30, 2011 year are $14,400.PP Ltd.wants to pay the lowest amount possible, without incurring interest penalties.What would its instalments be?
A)Twelve payments at $1,200 per month.
B)Twelve payments at $1,100 per month.
C)Twelve payments at $1,150 per month.
D)Two monthly payments at $1,200 each, followed by ten monthly payments at $1,140 each.
E) None of the above.

Question

Quizplus · Accepted Answer

PP Ltd. can base its instalments on the lower of the previous year's taxes payable ($13,200) or the estimated current year's taxes payable ($14,400). Twelve payments of $1,100 per month would total $13,200, which is the lowest amount possible without incurring interest penalties.

PP Ltd, a Client of Your Firm, Has a November 30th