Abitz Corporation Has the Following Pretax Operating Income in Its

question 15

Multiple Choice

Abitz Corporation has the following pretax operating income in its first three quarters of 2016.The effective tax rate for each quarter is provided.Determine the third quarter income tax or benefit. ?

$$\begin{array} { l r r } & \text { Current } & \text { Effective } \\\text { Quarter } & \text { Period } & \text { Tax Rate } \\ \text { First } & \$ 40,000 & 25 \% \\ \text { Second }& ( 25,000 ) & 25 \% \\\text { Third }& 50,000 & 30 \%\end{array}$$

• A)$3,750
• B)$15,000
• C)$15,750
• D)$20,000

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Definitions:

Face Value

The nominal value stated on a financial instrument, such as a bond or stock, representing its legal value at issuance or redemption.

Zero-Coupon Bond

A type of bond that does not pay periodic interest payments and is issued at a discount from its face value.

Purchase Price

The amount of money paid to buy a security, asset, or property.

Face Value

The nominal or dollar value printed on a security or financial instrument, such as a bond or stock.