Sunny Vale Co. reported the following for the current tax year: Compute Sunny Vale's total income tax liability.

Question

Sunny Vale Co. reported the following for the current tax year:  Compute Sunny Vale's total income tax liability.

Quizplus · Accepted Answer

We need to calculate Sunny Vale's total income tax liability based on the information given in the question.

First, we need to calculate the taxable income.

Total revenue: $625,000 
Cost of goods sold: $312,500 
Gross profit: $312,500 
Operating expenses: $177,800 
Depreciation expense: $85,000 
Operating income: $49,700 
Interest income: $5,000 
Taxable income: $54,700

Next, we need to use the tax tables to find the tax liability.

Taxable income: $54,700 
Tax rate: 22% 
Tax liability: $12,034

Finally, we need to add any additional taxes.

State income tax: $12,166 
Total income tax liability: $24,200

Therefore, the best answer choice is C.