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    A corporation sells computer. During the past year, the company's sales were $3,000,000. The cost of merchandise sold came to $2,000,000, and operating expenses was $500,000. The firm paid $150,000 in interest on its bank loan. It received $50,000 as cash dividend income. It paid dividends of $25,000.

    Please calculate the corporation's income tax liability using the following tax rate schedule:

    15% of the first $50,000 Taxable Income
    25% of the next $25,000 Taxable Income.
    34% of Taxable Income above $75,000.

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    Solution Preview

    The taxable income is the operating income,
    (Sales) - (Cost of Goods) - (operating expenses) =
    plus the ...

    Solution Summary

    Taxable income is shown in the solution.