Mr Ohno Owns and Operates a Part-Time Service Business That

question 69

Essay

Mr Ohno owns and operates a part-time service business that generates $80,000 annual taxable income. His federal tax rate on this income is 17%. Because of recent legislation, this rate will increase to 25% next year.
A. Based on a static forecast, how much additional revenue will the federal government collect from Mr Ohno next year?
B. How much additional revenue will the federal government collect if Mr Ohno decides to work fewer hours and consequently earns only $50,000 next year?

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Definitions:

Purchases Journal

An accounting record where all purchases of merchandise, inventory, and other supplies on credit are recorded, excluding cash purchases.

Cash Payments Journal

A journal used in accounting to record all cash outflows or payments made by a company.

Revenue Journal

A specialized accounting journal used to record the sales of services or goods on credit, highlighting the revenue aspect of transactions.

Fees Earned

Revenue generated by a company through the provision of services.