Busi 530 Hmwrk 2

Construct a balance sheet for Sophie’s Sofas given the following data. (Be sure to list the assets and liabilities in order of their liquidity.) |

  |   |   |   |

  Cash balances | = | $ | 14,500   |

  Inventory of sofas | = | $ | 245,000   |

  Store and property | = | $ | 145,000   |

  Accounts receivable | = | $ | 26,500   |

  Accounts payable | = | $ | 21,500   |

  Long-term debt | = | $ | 215,000   |

|

BALANCE SHEET OF SOPHIE’S SOFAS |

Assets |   | Liabilities & Shareholders’ Equity |   |

  Cash | $   |   Accounts payable | $   |

  Accounts receivable |   |   Long-term debt |   |

  Inventory |   |   Shareholders’ equity |   |

  Store & property |   |   |   |

  | |   | |

  Total assets | $   |   Total liabilities & Shareholders' equity | $   |

  | |   | |

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Using Table 3.7, calculate the marginal and average tax rates for a single taxpayer with the following incomes: (Do not round intermediate calculations. Round "Average tax rate" to 2 decimal places.) |

  | Income     |       Marginal Tax Rate |       Average Tax Rate |

a. | $25,000 | %   | %   |

b. | $55,000 | %   | %   |

c. | $320,000 | %   | %   |

d. | $4,000,000 | %   | %   |

|

Explanation:

a. |

Taxes = (0.10 × $8,500) + 0.15 × ($25,000 − $8,500) = $3,325 |

Marginal tax rate = 15% |

Average tax rate = $3,325/$25,000 = 0.13300 = 13.30% |

  |

b. |

Taxes = (0.10 × $8,500) + 0.15 × ($34,500 − $8,500) + 0.25 × ($55,000 − $34,500) = $9,875 |

Marginal tax rate = 25% |

Average tax rate = $9,875/$55,000 = 0.17955 = 17.95% |

  |

c. |

Taxes = (0.10 × $8,500) + 0.15 × ($34,500 − $8,500) + 0.25 × ($83,600 − $34,500) + 0.28 × ($174,400 − $83,600) + 0.33 × ($320,000 − $174,400) = $90,497 |

Marginal tax rate = 33% |

Average tax rate = $90,497/$320,000 = 0.282803 = 28.28% |

  |

d. |

Taxes = (0.10 × $8,500) + 0.15 × ($34,500 − $8,500) + 0.25 ×...