Question

Oakdale Fashions, Inc.’s, 2021 income statement is reported below. (Use corporate tax rate of 21 percent for your calculations.)

Oakdale Fashions, Inc., Income Statement for 2021
Net sales (all credit) $ 620,000
Less: Cost of goods sold 237,000
Gross profits $ 383,000
Less: Other operating expenses 112,000
EBITDA $ 271,000
Less: Depreciation and amortization 17,200
EBIT $ 253,800
Less: Interest 85,500
EBT $ 168,300
Less: Taxes
Net income $


Determine the firm's 2021 tax liability.

Answer 1

The firm's 2021 tax liability can be calculated as follows:

EBT (Earnings Before Taxes) = $168,300

Taxes = EBT * Corporate Tax Rate = $168,300 * 0.21 = $35,253.