Raymond Moss, vice president of Moss Auto Parts, gets an annual bonus of 10% of any income, before deducting bonus and income taxes, above $100,000. Income before bonus and income taxes is $304,000. The effective income tax rate is 25%.

The following information is available about Raymond Moss, the vice president of Moss Auto Parts:

DATA

Annual bonus : 10%

Income threshold: on income above 100000

Income before bonus and income taxes:

$304,000

Effective tax rate: 25%

REQUIRED:

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

2. Compute the income tax expense.

Using formulas and data from the problem above, perform the required analysis.

Amounts

Formulas

1. Raymond Moss's bonus

2. Income tax expense