Information from the Income Statement Columns of Lincoln Corporation's Worksheet

question 55

Essay

Information from the Income Statement columns of Lincoln Corporation's worksheet on December 31, 2013, is shown below. $\begin{array}{lr}\text { Sales } & \$ 920,000 \mathrm{Cr} . \\\text { Purchases } & 620,000 \mathrm{Dr} . \\\text { Selling Expense } & 140,000 \mathrm{Dr} . \\\text { Income Tax Expense } & ?\\\text { General and Administrative Expense } & \$ 90,000 \mathrm{Dr} \\\text { Amortization of Organization. Costs } & 600 \mathrm{Dr} . \\\text { Income Summary } & 170,000 \mathrm{Dr} \\\text { Income Summary } & 210,000 \mathrm{Cr} .\end{array}$ 1. What is the amount of net income before income tax?
2. What is the amount of income tax on the net income? Use the tax rates set forth below.
3. What adjustment is recorded for Income Tax Expense? The corporation paid $21,000 through quarterly deposits.
4. What is the amount of net income after income tax? $$\begin{array} { l l } \text { Taxable Income } & \text { Tax Rate } \\\hline \text { First } \$ 50,000 & 15 \text { percent } \\\text { Next } \$ 25,000 & 25 \text { percent } \\\text { Next } \$ 25,000 & 34 \text { percent } \\\text { Next } \$ 235,000 & 39 \text { percent } \\\text { Over } \$ 335,000 & \text { See IRS publications }\end{array}$$

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Definitions:

Annual Membership

A subscription or fee paid once a year to belong to a club, organization, or service, granting the member certain privileges, services, or access.

Crowded

A situation where a location or market is overly saturated with participants, leading to increased competition or decreased comfort.

Behavioral Economics

A field of economic research that examines how psychological, cognitive, emotional, cultural, and social factors affect economic decisions of individuals and institutions.

Marginal Benefit

The incremental benefit or enjoyment a consumer receives by using one more unit of a good or service.