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stintits Co. has an incentive compensation plan through which a division manager receives a bonus equal to 10% of the divisions net income. Division income
- stintits Co. has an incentive compensation plan through which a division manager receives a bonus equal to 10% of the divisions net income. Division income in 2019 before the bonus and income tax was $150,000. The tax rate is 21%.
Required:
- Express the bonus formula as one or more algebraic equation(s).
- Using these formulas, calculate the amount of the bonus.
- Prepare the adjusting entry to record the bonus compensation.
- Bonus arrangements take many forms. Suppose the bonus specifies that the bonus is 10% of the divisions income before tax, but after the bonus itself. Calculate the amount of the bonus.
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