Bonus Obligation

Raymond Moss, vice president of Moss Auto Parts, gets an annual bonus of 14% of any income, before deducting bonus and income taxes, above $100000. Income before bonus and income taxes is $285000. The effective income tax rate is 25%.

Required:

1. Compute the amount of Raymond Moss's bonus.

Bonus = $

2. Compute the income tax expense.

Income tax expense = $