FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Collin Products received notice of a $29,800 income tax deficiency plus $6,500 interest. The deficiency related to an incorrect method of accounting for business inventory.

Required:

  1. Compute the after-tax cost of the $6,500 interest payment assuming that Collin Products is a corporate taxpayer with a 21 percent marginal tax rate.
  2. Compute the after-tax cost of the $6,500 interest payment assuming that Collin Products is a sole proprietorship owned by Leslie Collin. Leslie’s marginal tax rate is 37 percent.
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