1. Your company has sales of $425,000; cost of goods sold = $200,000. The company paid interest of $25,000 on a loan and received $20,000 in dividends from GE. They paid $55,750 in common stock dividends and $10,000 in preferred stock dividends. What was their Federal tax bill?

First find the taxable income:

$425,000

-200,000

225,000

- 25,000

200,000

+ 6,000

$206,000

From the tax chart: $63,590

Other computation

($50,000 x .15 = $7,500); (25,000x.25 = $6,250); (25,000x.34 = $8,500); $106,000x .39=$41,340) therefore: $7,500 + $6,250 + $8,500 + $41,340 = $63,590

MY QUESTION:

Was simply hoping someone could explain to me the "other" computation for this problem. How did they find $50,000, 25000, 106,000 etc?