Vivo Corp. had the following financials for the most recent year. The company generated sales of $24.5 million.
Cost of goods sold were $7.3 million and the operating expenses included. $2,500,000 for selling and administrative expenses and $1,400,000 for depreciation expense. Also, $750,000 in interest expense was paid during the year.
The firm received $650,000 during the year in dividend income for 1,000 shares of common stock that had been purchased previously. Finally, the firm sold a piece of land for $2.1 million. That same land was acquired for $2.8 million three years earlier.
a) Prepare the income statement for Vivo Corp. starting with sales and ending with net income.
b) Calculate the corporation's tax liability.
Corporate Tax Rates
15% $0-$50,000
25% $50,001-$75,000
34% $75,001-$10,000,000
35% over $10,000,000
Additional surtax:
5% on income between $100,000 and $335,000
3% on income between $15,000,000 and 18,333,333