Wright, Inc
Subject:AccountingPrice:2.86 Bought5
Wright, Inc. has an incentive compensation plan under which the sales manager receives a bonus equal to 10 percent of the company's income after deductions for bonus and income taxes. Income before bonus and income taxes is 400,000. The effective income tax rate is 30 percent. How much is the bonus (rounded to the nearest peso)?
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Bonus = 26,168.22
Step-by-step explanation
STEP 1
B = 10% * (400000 - B - T)
T = 30%(400000 - B)
STEP 2
B = 10% * (400000- B - 30%(400000 - B))
B = 10% * (4000000 - B - 0.30(400000 - B))
B= 10%*(400000- B - 120,000 + 0.30B)
B = 0.1*(280,000 -B + 0.30B)
B = 0.1*(280,000 - 0.70B)
B = 28,000- 0.070B
B + 0.070B= 28,000
1.070B = 28,000
B = 28,000/ 1.070
= 105,056.17
Bonus = 26,168.22
