(Bonus Computation) Henryk Inc. has a contract with its president, Nathalie Sarraute, to pay her a bonus during each of the years 2003, 2004, 2005, and 2006. The federal income tax rate is 40% during the 4 years. The profit before deductions for bonus and federal income taxes was $250,000 in 2003,

$308,000 in 2004, $350,000 in 2005, and $380,000 in 2006. The president’s bonus of 12% is deductible for tax purposes in each year and is to be computed as follows.

(a) In 2003 the bonus is to be based on profit before deductions for bonus and income tax.

(b) In 2004 the bonus is to be based on profit after deduction of bonus but before deduction of income tax.

(c) In 2005 the bonus is to be based on profit before deduction of bonus but after deduction of income tax.

(d) In 2006 the bonus is to be based on profit after deductions for bonus and income tax.

Instructions Compute the amounts of the bonus and the income tax for each of the 4 years.