LO.8 Wayne Corporation is subject to State A’s franchise tax. The tax is imposed at a rate of 1.2% of the corporation’s net worth that is apportioned to the state by use of a two-factor formula (sales and property factors, equally weighted). The property factor includes real and tangible personal property, valued at historical cost as of the end of the taxable year.

Forty percent of Wayne’s sales are attributable to A, and $600,000 of the cost of Wayne’s tangible personal property is located in A.

Determine the A franchise tax payable by Wayne this year, given the following endof-

the-year balance sheet.

Cash $ 200,000 Equipment $1,000,000 Accumulated depreciation (300,000) 700,000 Furniture and fixtures $ 800,000 Accumulated depreciation (50,000) 750,000 Intangible assets 450,000 Total assets $2,100,000 Accounts and taxes payable $ 600,000 Long-term debt 750,000 Common stock 1,000 Additional paid-in capital 249,000 Retained earnings 500,000 Total liabilities and equity $2,100,000