Financial background my ppt @ bec doms

1. Financial Background: A Review of Accounting, Financial Statements, and Taxes

10. 10 A Conventional Balance Sheet Format

20. 20 Leverage

30. Progressive Tax Systems, Marginal and Average Rates 30 Q: Given the following tax brackets, calculate the tax on an income of $11,000. Also calculate the taxpayer’s marginal and average rates. A: Since the taxpayer earned more than $5,000 (but less than $15,000) she will be taxed at two rates. The first $5,000 is taxed at 10%: $5,000 x .10 = $ 500 The remaining $6,000 is taxed at 15% $6,000 x .15 = $ 900 Thus, her total tax is $1,400 Her marginal tax rate is 15%, since she would pay that on her next dollar of income, and her average tax rate is $1,400  $11,000 = 12.7% Example 25% Over $15,000 15% $5,000 - $15,000 10% 0 - $5,000 Tax Rate Bracket

34. Personal Tax Schedules - 2006 Table 2.4 34

38. Corporate Income Tax Schedule Table 2.5 38 The rate increases from 34% to 39% and 35% to 38% recover the benefit of lower rates on earlier income. So a corporation earning more than $18,333,333 pays 35% on all of its income from the first dollar.

39. Corporate Taxes Example 2.3 39 Q: Calculate, using the corporate tax rates in Table 2.5, the tax liability for a corporation making EBT of $280,000. A: Applying the corporate tax table results in the following tax liability: Example $92,450 Total $70,200 $180,000 x .39 $8,500 $25,000 x .34 $6,250 $25,000 x .25 $7,500 $50,000 x .15

41. Taxes and Financing 41