The Dot Corporation has changed its year-end from a calendar year-end to August 31. The income for its short period from January 1 to August 31 is $48,000. The tax for this short period is:

Question

Quizplus · Accepted Answer

The tax for the short period is calculated as follows: 
1. Calculate the annualized income by multiplying the short period income by 12/8: 
$48,000 x 12/8 = $72,000 
2. Calculate the tax on the annualized income using the corporate tax rate of 21%: 
$72,000 x 0.21 = $15,120 
3. Calculate the tax for the short period by multiplying the annualized tax by 8/12: 
$15,120 x 8/12 = $10,080 
Therefore, the answer is C) $8,667, which is the closest option to the calculated tax of $10,080.

The Dot Corporation Has Changed Its Year-End from a Calendar