Problem:
The Dana Flatt Corporation had sales of $2 million this past year. Its COGS was $1.2 million and its operating expenses were $400,000. Interest expenses on outstanding debt were $164,000 and the company paid $40,000 in stock dividends. Its tax rate is 34%.
Required:
Quesiton: What was the company's taxable income and tax liability (taxes paid).
A. $236,000, $80,240
B. $196,000, $66,640
C. $236,000, $155,760
D. $196,000, $129,360
E. $400,000, $136,000
Note: Provide support for your rationale.